Delusions are a difficult-to-treat and intellectually fascinating aspect of many psychiatric illnesses. Although scientific progress on this complex topic has been challenging, some recent advances focus on dysfunction in neural circuits, specifically in those involving dopaminergic and glutamatergic neurotransmission. Here we review the role of cholinergic neurotransmission in delusions, with a focus on nicotinic receptors, which are known to play a part in some illnesses where these symptoms appear, including delirium, schizophrenia spectrum disorders, bipolar disorder, Parkinson, Huntington, and Alzheimer diseases. Beginning with what we know about the emergence of delusions in these illnesses, we advance a hypothesis of cholinergic disturbance in the dorsal striatum where nicotinic receptors are operative. Striosomes are proposed to play a central role in the formation of delusions. This hypothesis is consistent with our current knowledge about the mechanism of action of cholinergic drugs and with our abstract models of basic cognitive mechanisms at the molecular and circuit levels. We conclude by pointing out the need for further research both at the clinical and translational levels.