The proteolytic cleavage of the amyloid precursor protein (APP) has been shown to be modulated through specific muscarinic receptor activation in vitro in both transfected cell lines and native brain slices, whereas a demonstration of receptor-mediated control of APP processing under in vivo conditions is still lacking. To simulate alterations in muscarinic receptor stimulation in vivo, we have (i) specifically reduced the cortical cholinergic innervation in rats using partial immunolesions with 192IgG-saporin, and (ii) restored cholinergic function in lesioned rats by transplantation of nerve growth factor producing fibroblasts. While total APP levels in cortical homogenates were unaffected by cholinergic deafferentation, we observed a significant reduction in the abundance of secreted APP and a concomitant increase in membrane-bound APP. These changes were reversed in immunolesioned rats with nerve growth factor-producing fibroblasts. There was a strong positive correlation between the ratio of secreted APP to membrane-bound APP and the activity of choline acetyltransferase and M1 muscarinic acetylcholine receptor density (measured by [3H]pirenzepine binding) in experimental groups. Additionally, we observed a transient decrease in the ratio of cortical APP transcripts containing the Kunitz protease inhibitor domain (APP 770 and APP 751) versus APP 695 in rats with cholinergic hypoactivity. The data presented suggest that cortical APP processing is under basal forebrain cholinergic control, presumably mediated through M1 muscarinic acetylcholine receptors on cholinoceptive cortical target cells.