Key points Neuronal nicotinic acetylcholine receptors (nAChRs) play a fundamental role in the attentional circuitry throughout the mammalian CNS. In the present study, we report a novel finding that ageing negatively impacts nAChR efficacy in auditory thalamus, and this is probably the result of a loss of nAChR density (Bmax) and changes in the subunit composition of nAChRs. Our data support the hypothesis that age‐related maladaptive changes involving nAChRs within thalamocortical circuits partially underpin the difficulty that elderly adults experience with respect to attending to speech and other salient acoustic signals. Abstract The flow of auditory information through the medial geniculate body (MGB) is regulated, in part, by cholinergic projections from the pontomesencephalic tegmentum. The functional significance of these projections is not fully established, although they have been strongly implicated in the allocation of auditory attention. Using in vitro slice recordings, we have analysed postsynaptic function and pharmacology of neuronal nicotinic ACh receptors (nAChRs) in young adult and the aged rat MGB. We find that ACh produces significant excitatory postsynaptic actions on young MGB neurons, probably mediated by β2‐containing heteromeric nAChRs. Radioligand binding studies show a significant age‐related loss of heteromeric nAChR receptor number, which supports patch clamp data showing an age‐related loss in ACh efficacy in evoking postsynaptic responses. Use of the β2‐selective nAChR antagonist, dihydro‐β‐erythroidine, suggests that loss of cholinergic efficacy may also be the result of an age‐related subunit switch from high affinity β2‐containing nAChRs to low affinity β4‐containing nAChRs, in addition to the loss of total nAChR number. This age‐related nAChR dysfunction may partially underpin the attentional deficits that contribute to the loss of speech understanding in the elderly.