Deep brain stimulation (DBS) has been found to have therapeutic effects in patients with dementia, but DBS mechanisms remain elusive. To provide evidence for the effectiveness of DBS as a treatment for dementia, we performed DBS in a rat model of dementia with intracerebroventricular administration of 192 IgG-saporins. We utilized four groups of rats, group 1, unlesioned control; group 2, cholinergic lesion; group 3, cholinergic lesion plus medial septum (MS) electrode implantation (sham stimulation); group 4, cholinergic lesions plus MS electrode implantation and stimulation. During the probe test in the water maze, performance of the lesion group decreased for measures of time spent and the number of swim crossings over the previous platform location. Interestingly, the stimulation group showed an equivalent performance to the normal group on all measures. And these are partially reversed by the electrode implantation. Acetylcholinesterase activity in the hippocampus was decreased in lesion and implantation groups, whereas activity in the stimulation group was not different from the normal group. Hippocampal neurogenesis was increased in the stimulation group. Our results revealed that DBS of MS restores spatial memory after damage to cholinergic neurons. This effect is associated with an increase in hippocampal cholinergic activity and neurogenesis.