1. Concomitant application of the cholinergic agonist carbachol and nanomolar doses of kainate can elicit persistent gamma frequency oscillations in all layers of the mouse somatosensory cortex in vitro. Receptor pharmacology with bath-applied antagonists indicated that oscillatory network activity depended crucially on the participation of cholinergic muscarinic, (S)-alpha-amino-3-hydroxy-5-methyl-4-isoxazolepropionic acid (AMPA)/kainate and GABAA receptors. 2. The timing of action potentials and the occurrence of excitatory as well as inhibitory postsynaptic events was highly correlated with the phasic change of extracellularly recorded population activity. Firing probability was lowest during the peak negativity of IPSPs and gradually increased during their ensuing decay. In conjunction with the effect of a barbiturate to decrease the frequency of gamma oscillations, this suggests a crucial role of IPSPs in phasing the suprathreshold activity of principal neurons. 3. At nearby (< 1 mm) sites contained within any given cortical layer, oscillatory extra- and intracellular activity was highly synchronous with no apparent phase lag. However, interlaminar mapping experiments demonstrated a phase reversal of both extra- and intracellularly recorded activity near the lower border of thalamo-recipient layer 4, thus corroborating findings that have been obtained in vivo. 4. In conclusion, a modest increase of tonic excitatory drive in conjunction with the activation of cholinergic muscarinic receptors can elicit persistent gamma frequency network oscillations in the rodent somatosensory cortex. These findings (re)emphasize the role of the cholinergic ascending system in the cortical processing of sensory information.