The Alzheimer amyloid precursor protein (APP) undergoes complex processing resulting in the production of a 4-kDa amyloid peptide (A beta) which has been implicated in the pathogenesis of Alzheimer's disease. Recent studies have shown that cells can secrete carboxyl terminus truncated APP derivatives (APP-S) in response to physiological stimulus. We have used human central nervous system neurons (NT2N) derived from a teratocarcinoma cell line (NT2) to study the signal transduction pathways involved in APP-S secretion and A beta production. Muscarinic receptors (m2 and m3) as well as the heterotrimeric GTP-binding protein Gq and the beta 1 isoform of phospholipase C were present in NT2N neurons. Stimulation of the muscarinic receptor with carbachol resulted in phospholipase C activation as shown by a transient increase in the second messengers 1,2-diacyl-sn-glycerol and inositol 1,4,5-trisphosphate. Carbachol also caused an increase in intracellular Ca2+ levels measured in single NT2N neurons. Under these conditions, carbachol caused a time-dependent 2-fold increase in APP-S secretion into the medium. In contrast, prolonged treatment with carbachol caused a decrease in A beta production into the medium. These results suggest that APP-S secretion and A beta production in NT2N neurons are regulated by the muscarinic/phospholipase C signal transduction pathway. Furthermore, activation of this pathway results in dissociation of APP-S secretion and A beta production.