This study focused on the molecular and pharmacological characterization of muscarinic acetylcholine receptors expressed by progenitors and differentiated oligodendrocytes. We also analyzed the role of muscarinic receptors in regulating downstream signal transduction pathways and the functional significance of receptor expression in oligodendrocytes. RT-PCR analysis revealed the expression of transcripts for M3, and to a lesser extent M4, followed by M1, M2 and M5 receptor subtypes in both progenitors and differentiated oligodendrocytes. Competition binding experiments using [3H]N-methylscopolamine and several antagonists, as well as inhibition of carbachol-mediated phosphoinositide hydrolysis, showed that M3 is the main subtype expressed in these cells. In progenitors the activation of p42/44-mitogen-activated protein kinase (MAPK) and cAMP-response element binding protein (CREB) as well as c-fos mRNA expression were blocked by the M3 relatively selective antagonist, 4-DAMP, and its irreversible analogue, 4-DAMP-mustard. Carbachol increased proliferation of progenitors, an effect prevented by atropine and 4-DAMP, as well as by the MAPK kinase inhibitor PD98059. These results indicate that carbachol modulates oligodendrocyte progenitor proliferation through M3 receptors, involving activation of a MAPK signaling pathway. Receptor density and phosphoinositide hydrolysis are down-regulated during oligodendrocyte differentiation. Functional consequences of these events are a reduction in carbachol-stimulated p42/44MAPK and CREB phosphorylation, as well as induction of c-fos.