We have examined the expression, the location, and the physiological activity of acetylcholinesterase (AChE) in developing intercostal muscles in the rat. Although focal accumulations of AChE at developing end plates do not appear until Embryonic Day (ED) 16-17, 16 S AChE is present at ED 14. Experiments with permeable and impermeable inhibitors established that prior to focal accumulation most of the 16 S enzyme is on the surface of muscle fibers, where it constitutes the major species. Intracellular recording from developing muscle fibers showed that as early as ED 14, AChE inhibitors prolonged evoked end-plate potentials. We conclude that prior to its focal accumulation, AChE is present on the surface of muscle fibers and is physiologically active. Histochemical staining of the focally accumulated enzyme demonstrated that the enzyme is concentrated both intracellularly and extracellularly at the sites of developing nerve-muscle contacts.