N-methyl-D-aspartate (NMDA)-type glutamate receptors perform critical functions during the development of the nervous system and in the initiation of synaptic plasticity. An important mechanism in setting the gain of NMDA receptors involves the stimulation of G-protein-coupled receptors (GPCRs), which through activation of protein tyrosine kinases leads to an upregulation of NMDA receptors. In contrast, little is known about how NMDA receptors are downregulated. In the present study, we characterized a signaling pathway that mediates the depression of NMDA receptor function in response to stimulation of muscarinic acetylcholine receptors. Whole-cell patch-clamp recordings obtained from CA3 pyramidal cells in organotypic slice cultures revealed that under conditions of low intracellular calcium buffering application of muscarine-depressed NMDA receptor current. The sensitivity of this response to pirenzipine indicated that the M1 acetylcholine receptor is mediating this depression. The muscarine-induced depression of NMDA current was prevented by blocking G-protein function or after depleting intracellular Ca2+ stores with cyclopiazonic acid. Inhibitors of calmodulin prevented the depression whereas blocking calcineurin enhanced the depression of NMDA currents. Blocking tyrosine phosphatase activity with pervanandate converted the muscarine-induced depression into a potentiation of NMDA currents, whereas blocking protein kinase A (H-89), Src kinase (PP2, SU6656), or PKC (GF 109203X) failed to prevent the depression of NMDA currents. As Src tyrosine kinase is known to phosphorylate and upregulate NMDA receptors, we propose that a protein tyrosine phosphatase(s) counteracting the action of Src is the final target in the mAChR-dependent inhibitory signaling cascade. Our data are consistent with a transduction cascade comprising an M1 acetylcholine receptor-->G-protein-->Ca2+ release-->calmodulin-->tyrosine phosphatase.