Acetylcholine (ACh) regulates many key functions of the CNS by activating cell surface receptors referred to as muscarinic ACh receptors (M(1)-M(5) mAChRs). Like other mAChR subtypes, the M(4) mAChR is widely expressed in different regions of the forebrain. Interestingly, M(4) mAChRs are coexpressed with D(1) dopamine receptors in a specific subset of striatal projection neurons. To investigate the physiological relevance of this M(4) mAChR subpopulation in modulating dopamine-dependent behaviors, we used Cre/loxP technology to generate mutant mice that lack M(4) mAChRs only in D(1) dopamine receptor-expressing cells. The newly generated mutant mice displayed several striking behavioral phenotypes, including enhanced hyperlocomotor activity and increased behavioral sensitization following treatment with psychostimulants. These behavioral changes were accompanied by a lack of muscarinic inhibition of D(1) dopamine receptor-mediated cAMP stimulation in the striatum and an increase in dopamine efflux in the nucleus accumbens. These novel findings demonstrate that a distinct subpopulation of neuronal M(4) mAChRs plays a critical role in modulating several important dopamine-dependent behaviors. Since enhanced central dopaminergic neurotransmission is a hallmark of several severe disorders of the CNS, including schizophrenia and drug addiction, our findings have substantial clinical relevance.