In previous studies m2 muscarinic acetylcholine receptor-immunoreactive interneurons and various types of m2-positive axon terminals have been described in the hippocampal formation. The aim of the present study was to identify the types of interneurons expressing m2 receptor and to examine whether the somadendritic and axonal m2 immunostaining labels the same or distinct cell populations. In the CA1 subfield, neurons immunoreactive for m2 have horizontal dendrites, they are located at the stratum oriens/alveus border and have an axon that project to the dendritic region of pyramidal cells. In the CA3 subfield and the hilus, m2-positive neurons are multipolar and are scattered in all layers except stratum lacunosum-moleculare. In stratum pyramidale of the CA1 and CA3 regions, striking axon terminal staining for m2 was observed, surrounding the somata and axon initial segments of pyramidal cells in a basket-like manner. The co-localization of m2 with neurochemical markers and GABA was studied using the "mirror" technique and fluorescent double-immunostaining at the light microscopic level and with double-labelling using colloidal gold-conjugated antisera and immunoperoxidase reaction (diaminobenzidine) at the electron microscopic level. GABA was shown to be present in the somata of most m2-immunoreactive interneurons, as well as in the majority of m2-positive terminals in all layers. The calcium-binding protein parvalbumin was absent from practically all m2-immunoreactive cell bodies and dendrites. In contrast, many of the terminals synapsing on pyramidal cell somata and axon initial segments co-localized parvalbumin and m2, suggesting a differential distribution of m2 receptor immunoreactivity on the axonal and somadendritic membrane of parvalbumin-containing basket and axo-axonic cells. The co-existence of m2 receptors with the calcium-binding protein calbindin and the neuropeptides cholecystokinin and vasoactive intestinal polypeptide was rare throughout the hippocampal formation. Only calretinin and somatostatin showed an appreciable degree of co-localization with m2 (20% and 15%, respectively). Using retrograde tracing, some of the m2-positive cells in stratum oriens were shown to project to the medial septum, accouting for 38% of all projection neurons. The present results demonstrate that there is a differential distribution of m2 receptor immunoreactivity on the axonal vs the somadendritic membranes of distinct interneuron types and suggest that acetylcholine via m2 receptors may reduce GABA release presynaptically from the terminals of perisomatic inhibitory cells, while it may act to increase the activity of another class of interneuron, which innervates the dendritic region of pyramidal cells.