Acetylcholine (ACh) is an important neuromodulator in various cognitive functions. However, it is unclear how ACh influences neural circuit dynamics by altering cellular properties. Here, we investigated how ACh influences reverberatory activity in cultured neuronal networks. We found that ACh suppressed the occurrence of evoked reverberation at low to moderate doses, but to a much lesser extent at high doses. Moreover, high doses of ACh caused a longer duration of evoked reverberation, and a higher occurrence of spontaneous activity. With whole-cell recording from single neurons, we found that ACh inhibited excitatory postsynaptic currents (EPSCs) while elevating neuronal firing in a dose-dependent manner. Furthermore, all ACh-induced cellular and network changes were blocked by muscarinic, but not nicotinic receptor antagonists. With computational modeling, we found that simulated changes in EPSCs and the excitability of single cells mimicking the effects of ACh indeed modulated the evoked network reverberation similar to experimental observations. Thus, ACh modulates network dynamics in a biphasic fashion, probably by inhibiting excitatory synaptic transmission and facilitating neuronal excitability through muscarinic signaling pathways.