A technique was developed to evaluate the potency of ligand binding at M2 ACh receptors and to experimentally localize the M1 and M2 subtypes to specific neuronal processes. Normal and experimental material was prepared with tritiated ligand binding to cryostat-sectioned area 29c of posterior cingulate cortex in rat, coverslip autoradiography, and single-grain-counting techniques. Three fundamental issues were addressed. 1. A morphological criterion termed an index of heterogeneity was developed by which the specificity of M2 binding by different ligands could be assessed. The index was calculated by first determining the laminar distribution of pirenzepine (PZ) binding sites and then summing absolute laminar variations from this distribution for each ligand. According to this measure the most efficient protocol for assaying M2 sites was tritiated oxotremorine-M (OXO) coincubated in unlabeled PZ (5 x 10(-8) M). The classical muscarinic antagonist propylbenzilylcholine mustard (Pr-BCM), however, when coincubated in PZ, was almost as efficient as PZ-blocked OXO binding. 2. Terminal axons of neurons in the anterior thalamic nuclei (ATN) have M2 receptors based on the following observations. First, specific binding of the M1 ligand PZ was unaffected by ATN lesions. Second, tritiated OXO and PrBCM binding blocked with unlabeled PZ, conditions favoring M2 receptor binding, showed significant reductions in binding in layers la, lb, and IV following ATN ablations. Third, IC50 values as determined by competition of PZ for PrBCM binding sites were shifted to lower concentrations in superficial layers by ATN lesions but not in deep layers where the thalamus does not terminate. Finally, in contrast to PZ-blocked OXO and PrBCM binding, binding of PZ-blocked 3H- quinuclidinyl benzilate (QNB) was reduced to homogeneity following ATN lesions. 3. Cortical pyramidal neurons have dendritic receptors that are primarily of the M1 subtype but may also include M2 sites. Thus, full depth ibotenic acid lesions reduced PZ binding by almost 70%. Neurotoxin lesions of neurons in layers II-IV or Vb-VI were followed by degeneration of the apical dendrites of pyramids in layer I and 78 and 15% reductions, respectively, in PZ binding. Also, full-depth neurotoxin lesions combined with ATN ablations completely abolished heterogeneities in PrBCM and PZ-blocked OXO binding. These data demonstrate that experimental techniques can be used in conjunction with normal material to make morphological assessments of the efficiency of binding of putative M2 ligands.