This dissertation addresses the role nicotinic acetylcholine receptors (nAChRs) play in cortical function. nAChRs are ligand gated ion channels that allow a non-specific (K) cation current to flow across the cell membrane when gated by acetylcholine or the exogenous agonist nicotine. Activation of nAChRs by acetylcholine and nicotine has been linked to cortical functions important during attention and working memory. The whole cell patch clamp technique and two-photon calcium imaging were used to assess the cellular effects of their activation in an acute cortical slice preparation experimentally relevant to attention processing. Specific interneurons but not pyramidal cells in layer V (primary output layer) of the mouse prefrontal cortex were found to express ionic conductances activated by nicotine. The expression of nAChRs in these cells types was confirmed using single cell PCR to screen for the corresponding mRNA transcripts. Spontaneous excitatory and inhibitory inputs to these cell types are also differentially modulated by nicotine application. The main experimental finding of the present work demonstrates that activation of nAChRs in the PFC can alter the threshold required to engage the calcium dependent process spike timing dependent plasticity (STDP) in layer V pyramidal cells. In line with our initial data that nAChRs in the PFC are expressed predominantly by GABAergic interneurons, this nicotine induced change in pyramidal cell STDP and the underlying calcium signalling was dependent on GABA transmission. Finally, we used multiple whole cell recordings to measure interpyramidal connectivity and the strength of disynaptic feedforward inhibition between layer V pyramidal cells of the mouse PFC. Our results confirmed the existence of a feedforward inhibitory loop between layer V pyramidal cells in the mouse similar to that found in the rat and ferret, and demonstrated that activation of nAChRs on the interceding interneuron can alter the strength of this feedforward loop. The present work has identified several cellular mechanisms by which nAChRs can alter PFC function. These processes are likely to be important to our understanding of the cognitive and addictive effects of nicotine, as well as the endogenous functional role of cortical nAChRs within the cholinergic system.