Contextual fear conditioning, where the prevailing situational cues become associated with an aversive unconditional stimulus such as electric shock, is sexually dimorphic. Males typically show higher levels of fear than females. There are two components to contextual fear conditioning. First the multiple cues that encompass the context must be integrated into a coherent representation, a process that requires the hippocampus. The second is that representation must be communicated to the basolateral amygdala where it can be associated with shock. If there is inadequate time for forming the representation prior to shock poor conditioning results and this is called the immediate shock deficit. One can isolate the contextual processing component, as well as alleviate the deficit, by providing an opportunity to explore the context without shock prior to the conditioning session. The purpose of the present study was to determine the extent to which cholinergic processes within the dentate gyrus of the hippocampus during contextual processing contribute to the sexual dimorphism. Clozapine-n-oxide (CNO) is a putatively inactive compound that acts only upon synthetic genetically engineered receptors. However, we found that CNO infused into the dentate gyrus prior to exploration eliminated the sexual dimorphism by selectively decreasing freezing in males to the level of females. Biological activity of CNO is usually attributed to metabolism of CNO to clozapine and we found that clozapine, and the muscarinic cholinergic antagonist, scopolamine, produced results similar to CNO, preferentially affecting males. On the other hand, the muscarinic agonist oxotremorine selectively impaired conditioning in females. Overall, the current experiments reveal significant off-target effects of CNO and implicate muscarinic cholinergic receptors in the dentate gyrus as a significant mediator of the sexual dimorphism in contextual fear conditioning.