Mutations in the presenilin genes (PS-1 and PS-2) are linked to early onset familial Alzheimer's disease (AD), but the mechanisms by which these mutations cause the cognitive impairment characteristic of AD are unknown. Basal forebrain cholinergic neurons are involved in learning and memory processes, and reductions in choline acetyl-transferase (ChAT) activity are a characteristic feature of AD brain. We therefore hypothesized that presenilin mutations suppress expression of the cholinergic phenotype. In rat PC12 cells stably transfected with the human PS-1 gene containing the Leu → Val mutation at codon 286 (L286V), we observed a drastic reduction (>90%) in basal ChAT activity compared with cells transfected with vector alone. By immunocytochemistry, a similar decrease in ChAT protein levels was found in the mutant transfectants. In cells differentiated with nerve growth factor, ChAT activity was again markedly lower in L286V-expressing cells than in control cells. We also observed reductions in ChAT activity in PC12 cells expressing the wild-type human PS-1 gene but to a lesser extent than in L286V expressing cells. The viability of cells transfected with either the wild- type or the mutant PS-1 gene was not compromised. Our results suggest that PS-1 mutations may contribute to the cognitive impairment in AD by causing a nontoxic suppression of the cholinergic phenotype.