Acetylcholine (ACh) is a key transmitter in the CNS, being released majorly by basal forebrain neurons which project diffusely to the forebrain. The ACh released from those diffusely projecting terminals has diverse effects on neocortical neurons. As a whole these effects shape neocortical function, increasing arousal among other things. Recent papers have detailed how ACh affects various excitatory, inhibitory and disinhibitory neurons in neocortical microcircuits, which in turn are connected to each other. We summarize the findings and attempt to bring them together into a coherent picture of how exactly ACh shapes neocortical function.