The basal forebrain (BF) is an important regulator of cortical excitability and responsivity to sensory stimuli, and plays a major role in wake-sleep regulation. While the impact of BF on cortical EEG or LFP signals has been extensively documented, surprisingly little is known about LFP activity within BF. Based on bilateral recordings from rats in their home cage, we describe endogenous LFP oscillations in the BF during quiet wakefulness, rapid eye movement (REM) and slow wave sleep (SWS) states. Using coherence and Granger causality methods, we characterize directional influences between BF and visual cortex (VC) during each of these states. We observed pronounced BF gamma activity particularly during wakefulness, as well as to a lesser extent during SWS and REM. During wakefulness, this BF gamma activity exerted a directional influence on VC that was associated with cortical excitation. During SWS but not REM, there was also a robust directional gamma band influence of BF on VC. In all three states, directional influence in the gamma band was only present in BF to VC direction and tended to be regulated specifically within each brain hemisphere. Locality of gamma band LFPs to the BF was confirmed by demonstration of phase locking of local spiking activity to the gamma cycle. We report novel aspects of endogenous BF LFP oscillations and their relationship to cortical LFP signals during sleep and wakefulness. We link our findings to known aspects of GABAergic BF networks that likely underlie gamma band LFP activations, and show that the Granger causality analyses can faithfully recapitulate many known attributes of these networks.