Acetylcholine (ACh) is an important modulator of learning, memory, and synaptic plasticity in the basolateral amygdala (BLA) and other brain regions. Activation of muscarinic acetylcholine receptors (mAChRs) suppresses a variety of potassium currents, including sI AHP , the calcium-activated potassium conductance primarily responsible for the slow afterhyperpolarization (AHP) that follows a train of action potentials. Muscarinic stimulation also produces inositol 1,4,5-trisphosphate (IP 3 ), releasing calcium from intracellular stores. Here, we show using whole-cell patch-clamp recordings and high-speed fluorescence imaging that focal application of mAChR agonists evokes large rises in cytosolic calcium in the soma and proximal dendrites in rat BLA projection neurons that are often associated with activation of an outward current that hyperpolarizes the cell. This hyperpolarization results from activation of small conductance calcium-activated potassium (SK) channels, secondary to the release of calcium from intracellular stores. Unlike bath application of cholinergic agonists, which always suppressed the AHP, focal application of ACh often evoked a paradoxical enhancement of the AHP and spike-frequency adaptation. This enhancement was correlated with amplification of the action potential-evoked calcium response and resulted from the activation of SK channels. When SK channels were blocked, cholinergic stimulation always reduced the AHP and spike-frequency adaptation. Conversely, suppression of the sI AHP by the -adrenoreceptor agonist, isoprenaline, potentiated the cholinergic enhancement of the AHP. These results suggest that competition between cholinergic suppression of the sI AHP and cholinergic activation of the SK channels shapes the AHP and spike-frequency adaptation.