The pedunculopontine tegmental nucleus (PPTg) contains a population of cholinergic neurons (the Ch5 group) and non-cholinergic neurons. There appears to be functional interdigitation betwen these two groups, which both have extensive projections. The principal ascending connections are with thalamic nuclei and structures associated with the striatum, including the substantial nigra pars compacta. The descending connections are with a variety of nuclei in the pons, medulla and spinal cord, concerned with autonomic and motor functions. In the past, emphasis has been laid on the role of the PPTg in locomotion and behavioural state control. In this review, we emphasise the role of the PPTg in processing outputs from the striatum. The non-cholinergic neurons receive outflow from both dorsal and vental striatum, and lesions of the PPTg disrupt behaviour associated with each of these. Our review indicates that the PPTg is less concerned with the induction of locomotion and more concerned with relating reinforcement (information about which comes from the ventral striatum) with motor output from the dorsal striatum. The conclusions we draw are: (1) the PPTg is an outflow system for the striatum, but also forms a ‘subsidiary circuit’, returning information to striatal circuitry; in this, the PPTg has an anatomical organisation that resembles that of the substantia nigra. (2) As well as a role in the mediation of REM sleep, cholinergic PPTg neurons have an important role in the waking state, providing feedback into the thalamus and striatum. (3) The precise function of the computations performed on striatal outflow by the PPTg is uncertain. We discuss whether this function is complementary (parallel to other routes of striatal outflow), integrative (modifying other forms of striatal outflow) or both.