Increased brain levels of acetylcholine (ACh) are observed in subsets of patients with depression and increasing ACh levels chronically can precipitate stress-related behaviors in humans and animals. Conversely, optimal ACh levels are required for cognition and memory. We hypothesize that ACh signaling is important for encoding both appetitive and stress-relevant memories, but that excessive increases in ACh result in a negative encoding bias in which memory formation of a stressful event is aberrantly strengthened, potentially contributing to the excessive focus on negative experience that could lead to depressive symptoms. The medial prefrontal cortex (mPFC) is critical to control the limbic system to filter exteroceptive cues and stress-related circuits. We therefore evaluated the role of ACh signaling in the mPFC in a learned helplessness task in which mice were exposed to repeated inescapable stressors followed by an active avoidance task. Using fiber photometry with a genetically-encoded ACh sensor, we found that ACh levels in the mPFC during exposure to inescapable stressors were positively correlated with later escape deficits in an active avoidance test in males, but not females. Consistent with these measurements, we found that both pharmacologically- and chemogenetically-induced increases in mPFC ACh levels resulted in escape deficits in both male and female mice, whereas chemogenetic inhibition of ACh neurons projecting to the mPFC improved escape performance in males, but impaired escape performance in females. These results highlight the adaptive role of ACh release in stress response, but also support the idea that sustained elevated ACh levels contribute to maladaptive behaviors. Furthermore, mPFC ACh signaling may contribute to depressive symptomology differentially in males and females.