Increasing evidence has shown that some neurotransmitters act as growth-regulatory signals during brain development. Here we report a role for the classical neurotransmitter acetylcholine (ACh) to stimulate proliferation of neural stem cells and stem cell-derived progenitor cells during neural cell lineage progression in vitro. Neuroepithelial cells in the ventricular zone of the embryonic rat cortex were found to express the m2 subtype of the muscarinic receptor. Neural precursor cells dissociated from the embryonic rat cortical neuroepithelium were expanded in culture with basic fibroblast growth factor (bFGF). reverse transcriptase-polymerase chain reaction (RT-PCR) revealed the presence of m2, m3 and m4 muscarinic receptor subtype transcripts, while immunocytochemistry demonstrated m2 protein. ACh and carbachol induced an increase in cytosolic Ca2+ and membrane currents in proliferating (BrdU+) cells, both of which were abolished by atropine. Exposure of bFGF-deprived precursor cells to muscarinic agonists not only increased both cell number and DNA synthesis, but also enhanced differentiation of neurons. These effects were blocked by atropine, indicating the involvement of muscarinic ACh receptors. The growth-stimulating effects were also antagonized by a panel of inhibitors of second messengers, including 1,2-bis-(O-aminophenoxy)-ethane-N,N,N', N'-tetraacetic acid (BAPTA-AM) to chelate cytosolic Ca2+, EGTA to complex extracellular Ca2+, pertussis toxin, which uncouples certain G-proteins, the protein kinase C inhibitor H7 and the mitogen-activated protein kinase (MAPK) inhibitor PD98059. Muscarinic agonists activated MAPK, which was significantly inhibited by atropine and the same panel of inhibitors. Thus, muscarinic receptors expressed by neural precursors transduce a growth-regulatory signal during neurogenesis via pathways involving pertussis toxin-sensitive G-proteins, Ca2+ signalling, protein kinase C activation, MAPK phosphorylation and DNA synthesis.