Alzheimer's disease (AD) is a common neurodegenerative disorder and a leading cause of death among the elderly. Recent advances in our understanding of the neurobiology of AD have provided scientific groundwork for the development of potentially more effective and less toxic treatment strategies for the disease. Some of the neuropathological hallmarks of AD include early and extensive degeneration of cortically projecting cholinergic neurons in the basal forebrain, and a reduced number of muscarinic acetylcholine receptors. Of note, neocortical muscarinic receptors of the M1 subtype are relatively preserved in the brains of patients with AD, whereas the presynaptic receptors, which are of the M2 subtype, are reduced in number. Therefore, activation of relatively intact postsynaptic mechanisms by muscarinic M1 receptor-specific agonists could theoretically be more efficacious in the treatment of AD compared with agents (e.g. acetylcholinesterase inhibitors) that predominantly act on dysfunctional presynaptic terminals. The administration of muscarinic agonists can demonstrably enhance cognition and significantly improve some of the disturbing behaviours in patients with AD. Recent advances in our knowledge of the molecular biology of muscarinic receptors, together with a better understanding of signal transduction pathways in AD, are likely to result in the development of receptor-specific muscarinic agonists that are more efficacious and less toxic. Moreover, preliminary evidence concerning the effects of muscarinic agonists on the processing of amyloid precursor protein and the formation of neurofibrillary tangles suggests that these agents might favourably alter the pathobiology of AD.