The neurotransmitter dopamine plays important roles in modulating cognitive, affective, and motor functions. Dysregulation of dopaminergic neurotransmission is thought to be involved in the pathophysiology of several psychiatric and neurological disorders, including schizophrenia, Parkinson's disease and drug abuse. Dopaminergic systems are regulated by cholinergic, especially muscarinic, input. Not surprisingly, increasing evidence implicates muscarinic acetylcholine receptor-mediated pathways as potential targets for the treatment of these disorders classically viewed as "dopamine based". There are five known muscarinic receptor subtypes (M(1) to M(5)). Due to their overlapping expression patterns and the lack of receptor subtype-specific ligands, the roles of the individual muscarinic receptors have long remained elusive. During the past decade, studies with knock-out mice lacking specific muscarinic receptor subtypes have greatly advanced our knowledge of the physiological roles of the M(1)-M(5) receptors. Recently, new ligands have been developed that can interact with allosteric sites on different muscarinic receptor subtypes, rather than the conventional (orthosteric) acetylcholine binding site. Such agents may lead to the development of novel classes of drugs useful for the treatment of psychosis, drug abuse and Parkinson's disease. The present review highlights recent studies carried out using muscarinic receptor knock-out mice and new subtype-selective allosteric ligands to assess the roles of M(1), M(4), and M(5) receptors in various central processes that are under strong dopaminergic control. The outcome of these studies opens new perspectives for the use of novel muscarinic drugs for several severe disorders of the CNS.