Psychologists, with their long-standing tradition of studying mechanistic processes, can make important contributions to further characterizing the risk associated with genes identified as influencing risk for psychiatric disorders. We report one such effort with respect to CHRM2, which codes for the cholinergic muscarinic 2 receptor and was of interest originally for its association with alcohol dependence. We tested for association between CHRM2 and prospectively measured externalizing behavior in a longitudinal, community-based sample of adolescents, as well as for moderation of this association by parental monitoring. We found evidence for an interaction in which the association between the genotype and externalizing behavior was stronger in environments with lower parental monitoring. There was also suggestion of a crossover effect, in which the genotype associated with the highest levels of externalizing behavior under low parental monitoring had the lowest levels of externalizing behavior at the extreme high end of parental monitoring. The difficulties involved in distinguishing mechanisms of gene-environment interaction are discussed.