Expression of KCNQ2/3 (Kv7.2 and -7.3) heteromers underlies the neuronal M current, a current that is suppressed by activation of a variety of receptors that couple to the hydrolysis of phosphatidylinositol 4,5-bisphosphate. Expression of Kv7.2/7.3 channels in human embryonic kidney (HEK) 293 cells produced a noninactivating potassium current characteristic of M current. Muscarinic receptors endogenous to HEK293 cells were identified as being M3 by pharmacology and Western blotting, producing a rise of intracellular calcium ([Ca2+](i)) upon activation. Activation of these endogenous muscarinic receptors however, failed to suppress expressed Kv7.2/7.3 current. Current suppression was reconstituted by coexpression of HA-tagged muscarinic m1 or m3 receptors. Examination of membrane fractions showed that both expressed receptors and Kv7.2 and -7.3 channel subunits resided within lipid rafts. Disruption of lipid rafts by pretreatment of cells expressing either m1 or m3 muscarinic receptors with methyl-beta-cyclodextrin produced a loss of localization of proteins within lipid raft membrane fractions. This pretreatment also abolished both the increase of [Ca2+](i) and suppression of expressed Kv7.2/7.3 current evoked by activation of expressed m1 or m3 muscarinic receptors. A similar loss of muscarinic receptor-mediated suppression of M current native to rat dorsal root ganglion neurons was observed after incubating dissociated cells with methyl-beta-cyclodextrin. These data suggested that lipid rafts colocalized both muscarinic receptors and channel subunits to enable receptor-mediated suppression of channel activity, a spatial colocalization that enables specificity of coupling between receptor and ion channel.