The muscarinic receptor family (M(1)-M(4)) mediates cholinergic modulation of hippocampal transmission. Pharmacological and physiological studies have indicated that a presynaptic receptor on cholinergic terminals plays a key role in regulating ACh release, although the molecular identity of this subtype is uncertain. In this study, the localization of the M(2) receptor is described in detail for the pyramidal cell layer in the CAl region of the hippocampus. Electron microscopic analysis of M(2) immunoreactivity in this area revealed mainly presynaptic expression of this subtype. Double-labeling experiments using antibodies to M(2) and to the vesicular acetylcholine transporter, a novel, specific marker of cholinergic terminals, were used to investigate the nature of these presynaptic receptors. These studies have revealed that M(2) is located in cholinergic and non-cholinergic terminals. This is the first direct anatomical evidence that suggests that M(2) may indeed function as a cholinergic autoreceptor in the hippocampus. The distribution of the M(2) receptor in non-cholinergic terminals also suggests functional roles for M(2) as a presynaptic heteroreceptor.