Social discrimination in rats requires activation of the intrinsic bulbar vasopressin system, but it is unclear how this system comes into operation, as olfactory nerve stimulation primarily inhibits bulbar vasopressin cells (VPCs). Here we show that stimulation with a conspecific can activate bulbar VPCs, indicating that VPC activation depends on more than olfactory cues during social interaction. A series of in vitro electrophysiology, pharmacology and immunohistochemistry experiments implies that acetylcholine, probably originating from centrifugal projections, can enable olfactory nerve-evoked action potentials in VPCs. Finally, cholinergic activation of the vasopressin system contributes to vasopressin-dependent social discrimination, since recognition of a known rat was blocked by bulbar infusion of the muscarinic acetylcholine receptor antagonist atropine and rescued by additional bulbar application of vasopressin. Thus, our results implicate that top-down cholinergic modulation of bulbar VPC activity is involved in social discrimination in rats. Hajime Suyama et al. combine slice electrophysiology, behavior, and pharmacology to demonstrate that top-down cholinergic modulation of bulbar vasopressin cell activity via muscarinic receptors contributes toward social discrimination in rats.