Molecular cloning studies have demonstrated the existence of five different muscarinic receptors (m1-m5). While m1, m3 and m5 strongly couple to stimulation of phosphoinositide (PI) hydrolysis, m2 and m4 are more efficiently linked to inhibition of adenylate cyclase. The sequences of m1-m5 have a short segment at the N-terminal portion of the putative third cytoplasmic loop (i3) which is highly conserved among m1, m3 and m5, but different from the sequence which is well conserved among m2 and m4. To study the role of this region in conferring coupling selectivity, we constructed cDNAs encoding chimeric m2/m3 receptors. Transient expression of these receptor hybrids in COS-7 cells showed that a 17 amino acid segment at the N-terminal portion of i3 is a major determinant of how efficiently the different muscarinic receptors are coupled to PI hydrolysis.