Assimilation of novel strategies into a consolidated action repertoire is a crucial function for behavioral adaptation and cognitive flexibility. Acetylcholine in the striatum plays a pivotal role in such adaptation, and its release has been causally associated with the activity of cholinergic interneurons. Here we show that the midbrain, a previously unknown source of acetylcholine in the striatum, is a major contributor to cholinergic transmission in the striatal complex. Neurons of the pedunculopontine and laterodorsal tegmental nuclei synapse with striatal cholinergic interneurons and give rise to excitatory responses. Furthermore, they produce uniform inhibition of spiny projection neurons. Inhibition of acetylcholine release from midbrain terminals in the striatum impairs the association of contingencies and the formation of habits in an instrumental task, and mimics the effects observed following inhibition of acetylcholine release from striatal cholinergic interneurons. These results suggest the existence of two hierarchically-organized modes of cholinergic transmission in the striatum, where cholinergic interneurons are modulated by cholinergic neurons of the midbrain.