Basal forebrain corticopetal neurons participate in the mediation of arousal, specific attentional functions and rapid eye movement sleep-associated dreaming. Recent studies on the afferent regulation of basal forebrain neurons by telencephalic and brainstem inputs have provided the basis for hypotheses which, collectively, propose that the involvement of basal forebrain corticopetal projections in arousal, attention and dreaming can be dissociated on the basis of their regulation via major afferent projections. While the processing underlying sustained, selective and divided attention performance depends on the integrity of the telencephalic afferent regulation of basal forebrain corticopetal neurons, arousal-induced attentional processing (i.e. stimulus detection, selection and processing as a result of a novel, highly salient, aversive or incentive stimuli) is mediated via the ability of brainstem ascending noradrenergic projections to the basal forebrain to activate or "recruit" these telencephalic afferent circuits of the basal forebrain. In rapid eye movement sleep, both the basal forebrain and thalamic cortiocopetal projections are stimulated by cholinergic afferents originating mainly from the pedunculopontine and laterodorsal tegmenta in the brainstem. Rapid eye movement sleep-associated dreaming is described as a form of hyperattentional processing, mediated by increased activity of cortical cholinergic inputs and their cortical interactions with activated thalamic efferents. In this context, long-standing speculations about the similarities between dreaming and psychotic cognition are substantiated by describing the role of an over(re)active cortical cholinergic input system in either condition. Finally, while determination of the afferent regulation of basal forebrain corticopetal neurons in different behavioral/cognitive states assists in defining the general cognitive functions of cortical acetylcholine, this research requires a specification of the precise anatomical organization of basal forebrain afferents and their interactions in the basal forebrain. Furthermore, the present hypotheses remain incomplete because of the paucity of data concerning the regulation and role of basal forebrain non-cholinergic, particularly GABAergic, efferents.