The release of insufficient amounts of insulin in the presence of elevated blood glucose levels is one of the key features of type 2 diabetes. Various lines of evidence indicate that acetylcholine (ACh), the major neurotransmitter of the parasympathetic nervous system, can enhance glucose-stimulated insulin secretion from pancreatic beta-cells. Studies with isolated islets prepared from whole body M(3) muscarinic ACh receptor knockout mice showed that cholinergic amplification of glucose-dependent insulin secretion is exclusively mediated by the M(3) muscarinic receptor subtype. To investigate the physiological relevance of this muscarinic pathway, we used Cre/loxP technology to generate mutant mice that lack M(3) receptors only in pancreatic beta-cells. These mutant mice displayed impaired glucose tolerance and significantly reduced insulin secretion. In contrast, transgenic mice overexpressing M(3) receptors in pancreatic beta-cells showed a pronounced increase in glucose tolerance and insulin secretion and were resistant to diet-induced glucose intolerance and hyperglycaemia. These findings indicate that beta-cell M(3) muscarinic receptors are essential for maintaining proper insulin secretion and glucose homeostasis. Moreover, our data suggest that enhancing signalling through beta-cell M(3) muscarinic receptors may represent a new avenue in the treatment of glucose intolerance and type 2 diabetes.