1. The molecular mechanisms involved in the regulation of muscarinic receptor gene expression are poorly understood. We have investigated the effect of homologous stimulation on the regulation of M2 muscarinic receptor protein and gene in human embryonic lung fibroblasts (HEL 299 cells). 2. Saturation studies performed with the non-selective hydrophilic ([3H]-N-methyl-scopolamine, [3H]-NMS) and lipophilic (3H]-quinuclidinyl benzilate, [3H]-QNB) muscarinic antagonists revealed a single class of high affinity binding sites. 3. Carbachol (1 mM) induced a rapid down-regulation of [3H]-NMS binding sites. Within 12 h, the process had approached steady state with 40 to 60% loss of receptors at 12 and 24 h. 4. The loss of [3h]-QNB binding sites (40% reduction at 24 h) occurred at a slower rate than did loss of [3H]-NMS binding sites as a result of receptor sequestration. 5. Carbachol treatment was accompanied by a functional desensitization of the receptor after 24 h of agonist treatment. In untreated cells, forskolin induced a large increase in cyclic AMP accumulation which was inhibited significantly by carbachol. The inhibitory effect of carbachol on forskolin-induced cyclic AMP accumulation was lost following 24 h carbachol stimulation. 6. The steady state level of muscarinic m2 mRNA measured by Northern blot analysis was not affected by carbachol had no effect on the stability of m2 mRNA. 7. The rate of transcription of m2 muscarinic receptor gene as measured by nuclear RNA run-on assay was unaltered by carbachol stimulation. 8. These results suggest that homologous sequestration, desensitization, and down-regulation of M2 modifications of m2 muscarinic receptor mRNAs.