We compared somatic and dendritic inhibition in paired recordings from two classes of anatomically identified interneurons and granule cells of the dentate gyrus. Inhibitory postsynaptic current (IPSC) amplitude and decay were remarkably similar at somatic and dendritic synapses. Slower IPSC rise times and longer latencies at dendritic synapses were consistent with their distal location, without requiring differences in postsynaptic gamma-aminobutyric acid type A (GABA(A)) receptor properties. In contrast, higher transmission failure rate and greater paired-pulse depression at dendritic synapses suggest that somatic and dendritic inhibition differ in presynaptic properties. Cholinergic input has been suggested to modulate hippocampal rhythmicity as well as episodic memory function. We therefore tested the effects of acetylcholine (ACh) on paired IPSCs and on spontaneous synaptic activity in interneurons and granule cells. We found no effect of ACh on paired IPSCs; however, spontaneous IPSCs recorded in granule cells were enhanced in amplitude and frequency. ACh potentiated spontaneous excitatory postsynaptic potentials (sEPSPs) and induced spiking in both types of interneuron, and preferentially increased sEPSP frequency in dendritic interneurons. Our findings suggest that patterns of activity in the two classes of interneurons, coupled with differences in their presynaptic properties, are likely to determine the roles of somatic and dendritic inhibition in network function.