Pancreatic muscarinic acetylcholine receptors play an important role in stimulating insulin and glucagon secretion from islet cells. To study the potential role of the M₃ muscarinic receptor subtype in cholinergic stimulation of insulin release, we initially examined the effect of the muscarinic agonist, oxotremorine-M (Oxo-M), on insulin secretion from isolated pancreatic islets prepared from wild-type (WT) and M₃ receptor–deficient mice (M3^+/− and M3^−/− mice). At a stimulatory glucose level (16.7 mmol/l), Oxo-M strongly potentiated insulin output from islets of WT mice. Strikingly, this effect was completely abolished in islets from M3^−/− mice and significantly reduced in islets from M3^+/− mice. Additional in vitro studies showed that Oxo-M–mediated glucagon release was also virtually abolished in islets from M3^−/− mice. Consistent with the in vitro data, in vivo studies showed that M3^−/− mice displayed reduced serum insulin and plasma glucagon levels and a significantly blunted increase in serum insulin after an oral glucose load. Despite the observed impairments in insulin release, M3^−/− mice showed significantly reduced blood glucose levels and even improved glucose tolerance, probably due to the reduction in plasma glucagon levels and the fact that M3^−/− mice are hypophagic and lean. These findings provide important new insights into the metabolic roles of the M₃ muscarinic receptor subtype.