Mutations in the X-linked MECP2 gene cause Rett syndrome (RTT), an autism spectrum disorder characterized by impaired social interactions, motor abnormalities, cognitive defects and a high risk of epilepsy. Here, we showed that conditional deletion of Mecp2 in cholinergic neurons caused part of RTT-like phenotypes, which could be rescued by re-expressing Mecp2 in the basal forebrain (BF) cholinergic neurons rather than in the caudate putamen of conditional knockout (Chat-Mecp2(-/y)) mice. We found that choline acetyltransferase expression was decreased in the BF and that α7 nicotine acetylcholine receptor signaling was strongly impaired in the hippocampus of Chat-Mecp2(-/y) mice, which is sufficient to produce neuronal hyperexcitation and increase seizure susceptibility. Application of PNU282987 or nicotine in the hippocampus rescued these phenotypes in Chat-Mecp2(-/y) mice. Taken together, our findings suggest that MeCP2 is critical for normal function of cholinergic neurons and dysfunction of cholinergic neurons can contribute to numerous neuropsychiatric phenotypes.