Although ionotropic glutamate receptors and nicotinic receptors for acetylcholine (ACh) have usually been studied separately, they are often co-localized and functionally inter-dependent. The objective of this review is to survey the evidence for interactions between the two receptor families and the mechanisms underlying them. These include the mutual regulation of subunit expression, which change the NMDA:AMPA response balance, and the existence of multi-functional receptor complexes which make it difficult to distinguish between individual receptor sites, especially in vivo. This is followed by analysis of the functional relationships between the receptors from work on transmitter release, cellular electrophysiology and aspects of behavior where these can contribute to understanding receptor interactions. It is clear that nicotinic receptors (nAChRs) on axonal terminals directly regulate the release of glutamate and other neurotransmitters, α7-nAChRs generally promoting release. Hence, α7-nAChR responses will be prevented not only by a nicotinic antagonist, but also by compounds blocking the indirectly activated glutamate receptors. This accounts for the apparent anticholinergic activity of some glutamate antagonists, including the endogenous antagonist kynurenic acid. The activation of presynaptic nAChRs is by the ambient levels of ACh released from pre-terminal synapses, varicosities and glial cells, acting as a ‘volume neurotransmitter’ on synaptic and extrasynaptic sites. In addition, ACh and glutamate are released as CNS co-transmitters, including ‘cholinergic’ synapses onto spinal Renshaw cells. It is concluded that ACh should be viewed primarily as a modulator of glutamatergic neurotransmission by regulating the release of glutamate presynaptically, and the location, subunit composition, subtype balance and sensitivity of glutamate receptors, and not primarily as a classical fast neurotransmitter. These conclusions and caveats should aid clarification of the sites of action of glutamate and nicotinic receptor ligands in the search for new centrally-acting drugs.