In chronic pain, the medial prefrontal cortex (mPFC) is deactivated and mPFC-dependent tasks such as attention and working memory are impaired. We investigated the mechanisms of mPFC deactivation in the rat spared nerve injury (SNI) model of neuropathic pain. Patch-clamp recordings in acute slices showed that, 1 week after the nerve injury, cholinergic modulation of layer 5 (L5) pyramidal neurons was severely impaired. In cells from sham-operated animals, focal application of acetylcholine induced a left shift of the input/output curve and persistent firing. Both of these effects were almost completely abolished in cells from SNI-operated rats. The cause of this impairment was an ∼60% reduction of an M1-coupled, pirenzepine-sensitive depolarizing current, which appeared to be, at least in part, the consequence of M1 receptor internalization. Although no changes were detected in total M1 protein or transcript, both the fraction of the M1 receptor in the synaptic plasma membrane and the biotinylated M1 protein associated with the total plasma membrane were decreased in L5 mPFC of SNI rats. The loss of excitatory cholinergic modulation may play a critical role in mPFC deactivation in neuropathic pain and underlie the mPFC-specific cognitive deficits that are comorbid with neuropathic pain. The medial prefrontal cortex (mPFC) undergoes major reorganization in chronic pain. Deactivation of mPFC output is causally correlated with both the cognitive and the sensory component of neuropathic pain. Here, we show that cholinergic excitation of commissural layer 5 mPFC pyramidal neurons is abolished in neuropathic pain rats due to a severe reduction of a muscarinic depolarizing current and M1 receptor internalization. Therefore, in neuropathic pain rats, the acetylcholine (ACh)-dependent increase in neuronal excitability is reduced dramatically and the ACh-induced persisting firing, which is critical for working memory, is abolished. We propose that the blunted cholinergic excitability contributes to the functional mPFC deactivation that is causal for the pain phenotype and represents a cellular mechanism for the attention and memory impairments comorbid with chronic pain.