Melatonin is an endogenously generated potent antioxidant. Our previous studies indicate that melatonin improved learning and memory deficits in APP695 transgenic mouse of Alzheimer's disease. An ovariectomized (OVX) rat model which is characterized by progressive memory deficits, central cholinergic nerve system degeneration and differentiation/apoptosis imbalance is the ideal in vivo model in which to test the neuroprotective effects of melatonin. OVX Sprague-Dawley rats received daily injections of melatonin (5, 10 and 20 mg/kg) or 17 beta-estradiol (E2, 80 microg/kg) or sesame oil for 16 wk. Morris water maze results showed that ovarian steroid deprivation resulted in spatial memory impairment, while melatonin and E2 significantly ameliorated spatial memory deficits in OVX rats. The latency to find the hidden platform and the distance to reach the platform become shorter in both melatonin and E2-treated rats compared with those that were only OVX. Four months after OVX, the choline acetyltransferase activity in the frontal cortex and hippocampus were greatly decreased in comparison with the controls. Melatonin and E2 antagonized the effects induced by OVX. Interestingly, the activity of the acetylcholinesterase was not altered in any group of rats. DNA fragmentation was presented in the front cortex of the OVX rats. Melatonin and E2 reduced the number of apoptotic neurons. These findings demonstrate the important effects of melatonin and E2 on cholinergic neurons and support the potential application of melatonin in the treatment of dementia in postmenopausal women. Our results indicate that neuroprotection by melatonin partly correlated to modulation of apoptosis and protection of the cholinergic system. Early long-term melatonin application is a promising strategy which could potentially be applied in a clinic setting.