The mouse cerebral cortex contains neurons that express choline acetyltransferase (ChAT) and are a potential local source of acetylcholine. However, the neurotransmitters released by cortical ChAT+ neurons and their synaptic connectivity are unknown. We show that the nearly all cortical ChAT+ neurons in mice are specialized VIP+ interneurons that release GABA strongly onto other inhibitory interneurons and acetylcholine sparsely onto layer 1 interneurons and other VIP+/ChAT+ interneurons. This differential transmission of ACh and GABA based on the postsynaptic target neuron is reflected in VIP+/ChAT+ interneuron pre-synaptic terminals, as quantitative molecular analysis shows that only a subset of these are specialized to release acetylcholine. In addition, we identify a separate, sparse population of non-VIP ChAT+ neurons in the medial prefrontal cortex with a distinct developmental origin that robustly release acetylcholine in layer 1. These results demonstrate both cortex-region heterogeneity in cortical ChAT+ interneurons and target-specific co-release of acetylcholine and GABA.