The motor and learning functions of the striatum are critically dependent on synaptic transmission from midbrain dopamine neurons and striatal cholinergic interneurons (CINs). Both neural populations alter their discharge in vivo in response to salient sensory stimuli, albeit in opposite directions. Whereas midbrain dopamine neurons respond to salient stimuli with a brief burst of activity, CINs exhibit a distinct pause in firing that is often followed by a period of increased excitability. Although this "pause-rebound" sensory response requires dopaminergic signaling, the precise mechanisms underlying the modulation of CIN firing by dopaminergic afferents remain unclear. Here, we show that phasic activation of nigrostriatal afferents in a mouse striatal slice preparation is sufficient to evoke a pause-rebound response in CINs. Using a combination of optogenetic, electrophysiological, and pharmacological approaches, we demonstrate that synaptically released dopamine inhibits CINs through type 2 dopamine receptors, while another unidentified transmitter mediates the delayed excitation. These findings imply that, in addition to their direct effects on striatal projection neurons, midbrain dopamine neurons indirectly modulate striatal output by dynamically controlling cholinergic tone. In addition, our data suggest that phasic dopaminergic activity may directly participate in the characteristic pause-rebound sensory response that CINs exhibit in vivo in response to salient and conditioned stimuli.