Acetylcholinesterase (AChE) accumulates on axonal varicosities and is primarily found as tetramers associated with a proline-rich membrane anchor (PRiMA). PRiMA is a small transmembrane protein that efficiently transforms secreted AChE to an enzyme anchored on the outer cell surface. Surprisingly, in the striatum of the PRiMA knock-out mouse, despite a normal level of AChE mRNA, we find only 2-3% of wild type AChE activity, with the residual AChE localized in the endoplasmic reticulum, demonstrating that PRiMA in vivo is necessary for intracellular processing of AChE in neurons. Moreover, deletion of the retention signal of the AChE catalytic subunit in mice, which is the domain of interaction with PRiMA, does not restore AChE activity in the striatum, establishing that PRiMA is necessary to target and/or to stabilize nascent AChE in neurons. These unexpected findings open new avenues to modulating AChE activity and its distribution in CNS disorders.