Alzheimer's disease (AD) is a neurodegenerative disease characterized by progressive loss of memory and other cognitive functions. Several lines of evidence suggest that neural network impairment leads to cognitive and behavioral deficits in AD, but the underlying cellular and molecular mechanisms are not completely understood. Several neurotransmitter systems are impaired in AD brain, in particular cholinergic neurons. However, drugs, such as acetylcholine esterase inhibitors, that are developed to target individual neurotransmitter systems have met with limited success. As a result, it has been suggested that prolonged and artificially elevated ambient levels of neurotransmitters may interfere with phasic synaptic signaling and lead to aberrant tonic activation of extrasynaptic receptors. Thus, elucidation of systems mechanisms may provide insights into novel strategies to develop more effective treatments for improving cognitive function, including better information on the long-range circuits and local microcircuits underlying cognitive function and better understanding of the roles and molecular basis of phasic and tonic modes of synaptic transmission elicited by individual neurotransmitters and their receptors. The advent of optogenetics coupled with large-scale in vivo recording of freely moving animals performing cognitive tasks provides an excellent opportunity to map functional circuitry and to determine the effect of different synaptic activation patterns to ameliorate cognitive deficits in AD. The prefrontal cortex (PFC) interacts with multiple cortical and subcortical structures and plays an important role in working memory, long-term memory consolidation and execution of actions. As neuronal loss in the nucleus basalis of Meynert (NBM), a component of the basal forebrain that provides long-range projections to the cortex, is a prominent feature in AD brain, we would like to focus on elucidating the cellular and molecular mechanisms of the NBM-PFC network activity underpinning cognitive deficits in AD. Toward this goal, we have provided evidence that APP41 line of AD mice, which express high levels of Amyloid peptide (A) in the cortex at 3 months of age, displays reduced cholinergic and GABAergic markers, cognitive deficits, altered theta and gamma oscillations and increased epileptic discharge. Furthermore, a neuregulin 1 (NRG1) mutation is associated with late-onset familial AD in patients with psychosis. Our preliminary results show that NRG1 improves cognitive deficits in APP41 mice, forms a complex with muscarinic acetylcholine receptor M2 and is required for ACh-induced neuronal excitability. Neuronal oscillations in the PFC are impaired in mice lacking NRG1 in the cholinergic neurons. To further elucidate the molecular and cellular mechanisms, three aims are proposed in the present application. Aim 1 is to characterize the network activity in the PFC during cognitive tasks in AD mice. Aim 2 is to determine the cholinergic and GABAergic contribution to network pathophysiology and behavior in AD mice. Aim 3 is to determine the role of NRG1 in the development of the NBM-PFC circuit, network activity and cognitive function in AD mice.