The lateral habenula (LHb) balances reward and aversion by opposing activation of brain reward nuclei and is involved in the inhibition of responding for cocaine in a model of impulsive behavior. Previously, we reported that the suppression of cocaine seeking was prevented by LHb inactivation or nonselective antagonism of LHb mAChRs. Here, we investigate mAChR subtypes mediating the effects of endogenous acetylcholine in this model of impulsive drug seeking and define cellular mechanisms in which mAChRs alter LHb neuron activity. Using in vitro electrophysiology, we find that LHb neurons are depolarized or hyperpolarized by the cholinergic agonists oxotremorine-M (Oxo-M) and carbachol (CCh), and that mAChRs inhibit synaptic GABA and glutamatergic inputs to these cells similarly in male and female rats. Synaptic effects of CCh were blocked by the M2-mAChR (M2R) antagonist AFDX-116 and not by pirenzepine, an M1-mAChR (M1R) antagonist. Oxo-M-mediated depolarizing currents were also blocked by AFDX-116. Although M2R activation inhibited excitatory and inhibitory inputs to LHb neurons, the effect on excitation was greater, suggesting a shift in excitatory-inhibitory balance toward net inhibition. Activation of VTA inhibitory inputs to LHb neurons, via channelrhodopsin-2 expression, evoked IPSCs that were inhibited by M2Rs. Finally, we measured LHb-dependent operant response inhibition for cocaine and found it impaired by antagonism of M2Rs, and not M1Rs. In summary, we show that a cholinergic signal to LHb and activation of M2Rs are critical to enable inhibition of responding for cocaine, and we define cellular mechanisms through which this may occur.SIGNIFICANCE STATEMENT The lateral habenula (LHb) is a brain region receiving information from brain areas involved in decision-making, and its output influences motivation, reward, and movement. This interface between thoughts, emotions, and actions is how the LHb permits adaptive behavior, and LHb dysfunction is implicated in psychiatric and drug use disorders. Silencing the LHb impairs control over cocaine seeking in rats, and mAChRs are also implicated. Here, we measured cocaine seeking while blocking different mAChRs and examined mechanisms of mAChR effects on LHb neurons. M2-mAChRs were necessary for control of cocaine seeking, and these receptors altered LHb neuron activity in several ways. Our study reveals that LHb M2-mAChRs represent a potential target for treating substance use disorders.