Within the basal ganglia, striatal dopamine (DA) and acetylcholine (Ach) are essential for the selection and reinforcement of motor actions and decision making. In vitro studies have revealed a circuit local to the striatum by which each of these two neurotransmitters directly regulates release of the other. Ach, released by a unique population of cholinergic interneurons (CINs), drives DA release via direct axonal depolarization. In turn, DA inhibits CIN activity via dopamine D2 receptors (D2R). Whether and how this circuit contributes to striatal function in vivo remains unknown. To define the in vivo role of this circuit, we monitored Ach and DA signals in the ventrolateral striatum of mice performing a reward-based decision-making task. We establish that DA and Ach exhibit multiphasic and anticorrelated transients that are modulated by decision history and reward outcome. However, CIN perturbations reveal that DA dynamics and reward-prediction error encoding do not require Ach release by CINs. On the other hand, CIN-specific deletion of D2Rs shows that DA inhibits Ach levels in a D2R-dependent manner, and loss of this regulation impairs decision-making. To determine how other inputs to striatum shape Ach signals, we assessed the contribution of projections from cortex and thalamus and found that glutamate release from both sources is required for Ach release. Altogether, we uncover a dynamic relationship between DA and Ach during decision making and reveal modes of CIN regulation by local DA signals and long-range cortical and thalamic inputs. These findings deepen our understanding of the neurochemical basis of decision making and behavior.