Bay leaf (Laurus nobilis L.) has been shown to possesses various biological activities such as wound healing activity, antioxidant activity, antibacterial activity, antiviral activity, immunostimulant activity, anticholinergic activity, antifungal activity, insect repellant activity, anticonvulsant activity, antimutagenic activity, and analgesic and anti-inflammatory activity. The present study aimed to investigate whether the bay leaf incense (BL) elicits the memory formation via the action on the cholinergic system using a scopolamine (Sco)-induced rat model. Rats were exposed to BL over 5 min in a smoking chamber apparatus once daily for 22 days, whereas memory impairment was induced by Sco (0.7 mg/kg), a muscarinic receptor antagonist, delivered 30 min before each behavioral test. The phytochemical composition of BL was achieved by gas chromatograph–mass spectrometry (GCMS). Behavioral effects in rats were assessed by Y-maze, radial arm maze (RAM), and novel object recognition (NOR) paradigms. Additionally, the acetylcholinesterase (AChE) activity and the oxidative stress markers in the rat hippocampus were also evaluated. Exposure to BL significantly ameliorated Sco-induced cognitive impairment and oxidative stress in the rat hippocampus. The obtained results suggested that BL-induced ameliorative cognitive effects are mediated by enhancement of the cholinergic system and antioxidant activities.