Chronic stress in rats has been shown to impair learning and memory, and precipitate several affective disorders like depression and anxiety. The mechanisms involved in these stress-induced disorders and the possible reversal are poorly understood, thus limiting the number of drugs available for their treatment. Our earlier studies suggest cholinergic dysfunction as the underlying cause in the behavioral deficits following stress. Muscarinic cholinergic agonist, oxotremorine is demonstrated to have a beneficial effect in reversing brain injury-induced behavioral dysfunction. In this study, we have evaluated the effect of oxotremorine treatment on chronic restraint stress-induced cognitive deficits. Rats were subjected to restraint stress (6 h/day) for 21 days followed by oxotremorine treatment for 10 days. Spatial learning and memory was assessed in a partially baited eight-arm radial maze task. Stressed rats exhibited impairment in performance, with decreased percentage of correct choices and an increase in the number of reference memory errors (RMEs). Oxotremorine treatment (0.1 or 0.2 mg/kg, i.p.) to stressed rats resulted in a significant increase in the percent correct choices and a decrease in the number of RMEs compared with stress as well as the stress+vehicle-treated groups. In the retention test, oxotremorine treated rats committed less RMEs compared with the stress group. Chronic restraint stress decreased acetylcholinesterase (AChE) activity in the hippocampus, frontal cortex and septum, which was reversed by both the doses of oxotremorine. Further, oxotremorine treatment also restored the norepinephrine levels in the hippocampus and frontal cortex. Thus, this study demonstrates the potential of cholinergic muscarinic agonists and the involvement of both cholinergic and noradrenergic systems in the reversal of stress-induced learning and memory deficits.