Muscarinic acetylcholine receptors mediate transmission of an extracellular signal represented by released acetylcholine to neuronal or effector cells. There are five subtypes of closely homologous muscarinic receptors which are coupled by means of heterotrimeric G-proteins to a variety of signaling pathways resulting in a multitude of target cell effects. Endogenous agonist acetylcholine does not discriminate among individual subtypes and due to the close homology of the orthosteric binding site the same holds true for most of exogenous agonists. In addition to the classical binding site muscarinic receptors have one or more allosteric binding sites at extracellular domains. Binding of allosteric modulators induces conformational changes in the receptor that result in subtype-specific changes in orthosteric binding site affinity for both muscarinic agonists and antagonists. This overview summarizes our recent experimental effort in investigating certain aspects of M2 muscarinic receptor functioning concerning i) the molecular determinants that contribute to the binding of allosteric modulators, ii) G-protein coupling specificity and subsequent cellular responses and iii) possible functional assays that exploit the unique properties of allosteric modulators for characterization of muscarinic receptor subtypes in intact tissue. A detailed knowledge of allosteric properties of muscarinic receptors is required to permit drug design that will modulate signal transmission strength of specific muscarinic receptor subtypes. Furthermore, allosteric modulation of signal transmission strength is determined by cooperativity rather than concentration of allosteric modulator and thus reduces the danger of overdose.