Indirect modulation of cholinergic activity by cholinesterase inhibition is currently a widely established symptomatic treatment for Alzheimer's disease (AD). Selective activation of certain muscarinic receptor subtypes has emerged as an alternative cholinergic-based amyloid-lowering strategy for AD, as selective muscarinic M1 receptor agonists can reduce amyloid-β (Aβ) production by shifting endoproteolytic amyloid-β protein precursor (AβPP) processing toward non-amyloidogenic pathways. In this study, we addressed the hypothesis that acute stimulation of muscarinic M1 receptors can inhibit Aβ production in awake and freely moving AβPP transgenic mice. By combining intracerebral microdialysis with retrodialysis, we determined hippocampal Aβ concentrations during simultaneous pharmacological modulation of brain M1 receptor function. Infusion with a M1 receptor agonist AF102B resulted in a rapid reduction of interstitial fluid (ISF) Aβ levels while treatment with the M1 antagonist dicyclomine increased ISF Aβ levels reaching significance within 120 minutes of treatment. The reduction in Aβ levels was associated with PKCα and ERK activation resulting in increased levels of the α-secretase ADAM17 and a shift in AβPP processing toward the non-amyloidogenic processing pathway. In contrast, treatment with the M1 receptor antagonist dicyclomine caused a decrease in levels of phosphorylated ERK that was independent of PKCα, and led to an elevation of β-secretase levels associated with increased amyloidogenic AβPP processing. The results of this study demonstrate rapid effects of in vivo M1 receptor modulation on the ISF pool of Aβ and suggest that intracerebral microdialysis with retrodialysis is a useful technical approach for monitoring acute treatment effects of muscarinic receptor modulators on AβPP/Aβ metabolism.