The CHRM2 gene is thought to be involved in neuronal excitability, synaptic plasticity and feedback regulation of acetylcholine release and has previously been implicated in higher cognitive processing. In a sample of 667 individuals from 304 families, we genotyped three single-nucleotide polymorphisms (SNPs) in the CHRM2 gene on 7q31–35. From all individuals, standardized intelligence measures were available. Using a test of within-family association, which controls for the possible effects of population stratification, a highly significant association was found between the CHRM2 gene and intelligence. The strongest association was between rs324650 and performance IQ (PIQ), where the T allele was associated with an increase of 4.6 PIQ points. In parallel with a large family-based association, we observed an attenuated – although still significant – population-based association, illustrating that population stratification may decrease our chances of detecting allele–trait associations. Such a mechanism has been predicted earlier, and this article is one of the first to empirically show that family-based association methods are not only needed to guard against false positives, but are also invaluable in guarding against false negatives.