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Vagus nerve stimulation (VNS) is a neuromodulation therapy for a broad and rapidly expanding set of neurologic conditions. Classically used to treat epilepsy and depression, VNS has recently received FDA approval for stroke rehabilitation and is under preclinical and clinical investigation for other neurologic indications. Despite benefits across a diverse range of neurological disorders, the mechanism through which VNS influences central nervous system circuitry is not well described, limiting therapeutic optimization. A deeper understanding of the influence of VNS on neural circuits and activity is needed to maximize the use of VNS therapy across a broad range of neurologic conditions.To investigate how VNS can influence the neurons and circuits that underlie behavior, we paired VNS with upper limb movement in mice learning a skilled motor task. We leveraged genetic tools to perform optogenetic circuit dissection, as well as longitudinal in vivo imaging of calcium activity in cortical neurons to understand the effect of VNS on neural function. We found that VNS robustly enhanced motor learning when temporally paired with successful movement outcome, while randomly applied VNS impaired learning. This suggests that temporally-precise VNS may act through augmenting outcome cues, such as reinforcement signals. Within motor cortex, VNS paired with movement outcome selectively modulates the neural population that represents outcome, but not other movement-related neurons, across both acute and behaviorally-relevant timescales. Phasic cholinergic signaling from basal forebrain is required both for VNS-driven improvements in motor learning and the effects on neural activity in M1. These results indicate that VNS enhances motor learning through precisely-timed phasic cholinergic signaling to reinforce outcome, resulting in the recruitment of specific, behaviorally-relevant cortical circuits. A deeper understanding of the mechanisms of VNS on neurons, circuits and behavior provides new opportunities to optimize VNS to treat neurologic conditions.