Human immunodeficiency virus (HIV)-associated dementia (HAD) is a frequent complication in HIV+ subjects. Several electrophysiological markers and motor control are altered in HIV+ subjects, including event-related potentials (N2-P3 changes). These are electrophysiological indicators of cognitive processing. The mechanisms by which HIV induces neurophysiological abnormality is still under research. However, several neurotransmitters have been implicated. For example, glutamate and the vasoactive intestinal neuropeptide (VIP). In this study, we support further this notion indicating that HIVgp120, a glycoprotein derived from HIV, is involved in the pathogenesis of neuropsychiatric abnormalities. We also have observations suggesting that one HIVgp120 mechanism of action is to interfere with cholinergic neurotransmission. Our results indicate that event-related potentials (ERP) were affected by HIVgp120, in particular N2 and P3. In addition, motor coordination was severely affected. Both parameters were maintained near normality when rats were simultaneously treated with nicotine. These results support further an HIVgp120-caused alteration of cholinergic neurotransmission that might be part of the etiology of neuropsychiatric disturbances.