Receptor-mediated modulation of KCNQ channels regulates neuronal excitability. This study concerns the kinetics and mechanism of M1 muscarinic receptor-mediated regulation of the cloned neuronal M channel, KCNQ2/KCNQ3 (Kv7.2/Kv7.3). Receptors, channels, various mutated G-protein subunits, and an optical probe for phosphatidylinositol 4,5-bisphosphate (PIP2) were coexpressed by transfection in tsA-201 cells, and the cells were studied by whole-cell patch clamp and by confocal microscopy. Constitutively active forms of Galphaq and Galpha11, but not Galpha13, caused a loss of the plasma membrane PIP2 and a total tonic inhibition of the KCNQ current. There were no further changes upon addition of the muscarinic agonist oxotremorine-M (oxo-M). Expression of the regulator of G-protein signaling, RGS2, blocked PIP2 hydrolysis and current suppression by muscarinic stimulation, confirming that the Gq family of G-proteins is necessary. Dialysis with the competitive inhibitor GDPbetaS (1 mM) lengthened the time constant of inhibition sixfold, decreased the suppression of current, and decreased agonist sensitivity. Removal of intracellular Mg2+ slowed both the development and the recovery from muscarinic suppression. When combined with GDPbetaS, low intracellular Mg2+ nearly eliminated muscarinic inhibition. With nonhydrolyzable GTP analogs, current suppression developed spontaneously and muscarinic inhibition was enhanced. Such spontaneous suppression was antagonized by GDPbetaS or GTP or by expression of RGS2. These observations were successfully described by a kinetic model representing biochemical steps of the signaling cascade using published rate constants where available. The model supports the following sequence of events for this Gq-coupled signaling: A classical G-protein cycle, including competition for nucleotide-free G-protein by all nucleotide forms and an activation step requiring Mg2+, followed by G-protein-stimulated phospholipase C and hydrolysis of PIP2, and finally PIP2 dissociation from binding sites for inositol lipid on the channels so that KCNQ current was suppressed. Further experiments will be needed to refine some untested assumptions.