Hyperphosphorylated tau proteins are the principal fibrous component of the neurofibrillary tangle pathology in Alzheimer's disease. The possibility that tau phosphorylation is controlled by cell surface neurotransmitter receptors was examined in PC12 cells transfected with the gene for the rat m1 muscarinic acetylcholine receptor. Stimulation of m1 receptor in these cells with two acetylcholine agonists, carbachol and AF102B, decreased tau phosphorylation, as indicated by specific tau monoclonal antibodies that recognize phosphorylation-dependent epitopes and by alkaline phosphatase treatment. The muscarinic effect was both time and dose dependent. In addition, a synergistic effect on tau phosphorylation was found between treatments with muscarinic agonists and nerve growth factor. These studies provide the first evidence for a link between the cholinergic signal transduction system and the neuronal cytoskeleton that can be mediated by regulated phosphorylation of tau microtubule-associated protein.