The acetylcholinesterase (AChE) gene promoter contains several overlapping binding sites for Sp1 and Egr-1 transcription factors. Cotransfection experiments and promoter assays showed that Egr-1 can potently activate transcription from the human AChE promoter. Muscarinic acetylcholine receptors (mAChR) rapidly activate, via protein kinase C-mediated signaling, expression of the Egr-1 gene, leading to dramatically increased nuclear concentrations of Egr-1 protein, and to increased binding of Egr-1 to specific DNA recognition sequences. These mAChR-induced increases are followed by increased transcription from the human AChE promoter. In vivo studies with intraventricular infusions of the cholinergic immunotoxin 192 IgG saporin showed more than 80% decrease of AChE activity in cholinergic target areas of the hippocampus and brain cortex. The results are compatible with a combination of decreased AChE activity in degenerating subcortical cholinergic projections, and additional decreases in postsynaptic AChE gene expression. Together our data show that mAChR can activate transcription from the AChE promoter via increased synthesis of Egr-1. The results suggest a feedback mechanism by which the AChE gene is activated by cholinergic neurotransmission, possibly leading to increased formation of AChE protein and accelerated degradation of acetylcholine at cholinergic synapses. This possibility suggests testing of cholinomimetic compounds currently in development for the treatment of Alzheimer's disease for their potential ability to increase AChE gene expression.