Acetylcholine release from cholinergic nerves in the gastrointestinal tract is limited by neuronal M 2 muscarinic receptors. In diabetic animals, M 2 muscarinic receptor function in the ileum is increased, leading to decreased acetylcholine release and smooth muscle contraction in response to nerve stimulation. The mechanisms responsible for increased M 2 muscarinic receptor function are unknown but may contribute to the gastrointestinal dysmotility that occurs frequently in diabetics. In this study, we investigated whether insulin modulates M 2 muscarinic receptor function in the gastrointestinal tract of diabetic rats. M 2 muscarinic receptor function was tested by measuring the ability of an agonist, pilocarpine, to inhibit and an antagonist, methoctramine, to potentiate electrical field stimulation (EFS)-induced contraction of ileum in vitro. Insulin administration (0.2, 0.6, and 2 U s.c. daily for 7 days) reversed the diabetes-induced increase in M 2 muscarinic receptor function and restored normal contractions to EFS. Insulin had no effect on the function of postjunctional M 3 muscarinic receptors, determined by measuring contractile responses to acetylcholine. These data suggest that insulin tonically inhibits neuronal M 2 muscarinic receptors. Thus, loss of insulin removes this inhibition and increases M 2 muscarinic receptor function leading to decreased acetylcholine release and contraction to EFS. In nondiabetic rats, there was a trend that higher insulin doses (0.6 and 2 U) increased M 2 muscarinic receptor function, suggesting a bell-shaped concentration-response relationship for insulin. In conclusion, lack of insulin or excess insulin increases M 2 muscarinic receptor function in rat ileum. This mechanism may contribute to decreased acetylcholine release in the gastrointestinal tract of diabetics, resulting in dysmotility.