Striatal dopamine (DA) and acetylcholine (Ach) are essential for the selection and reinforcement of motor actions and decision-making1. In vitro studies have revealed an intrastriatal circuit in which Ach, released by cholinergic interneurons (CINs), drives DA release, and DA in turn inhibits CIN activity via dopamine D2 receptors (D2R). Whether and how this circuit contributes to striatal function in vivo is largely unknown. To define the role of this circuit in vivo, we monitored Ach and DA signals in the ventrolateral striatum of mice performing a reward-based decision-making task. We establish that DA and Ach exhibit multiphasic and anticorrelated transients that are modulated by decision history and reward outcome. DA dynamics and reward encoding do not require Ach release by CINs. However, DA inhibits Ach transients in a D2R-dependent manner and loss of this regulation impairs decision-making. To determine how other striatal inputs shape Ach signals, we assessed the contribution of cortical and thalamic projections and found that glutamate release from both sources is required for Ach release. Altogether, we uncover a dynamic relationship between DA and Ach during decision-making and reveal multiple modes of CIN regulation. These findings deepen our understanding of the neurochemical basis of decision-making and behavior.