Muscarinic m1 receptors are inhibited by local anaesthetics (LA) at nM concentrations. To elucidate in more detail the site(s) of LA interaction, we compared these findings with LA effects on m3 muscarinic receptors. We expressed receptors in Xenopus oocytes. Using two‐electrode voltage clamp, we measured the effects of lidocaine, QX314 (permanently charged) and benzocaine (permanently uncharged) on Ca2+‐activated Cl−‐currents (ICl(Ca)), elicited by acetyl‐β‐methylcholine bromide (MCh). We also characterized the interaction of lidocaine with [3H]‐quinuclydinyl benzylate ([3H]‐QNB) binding to m3 receptors. Antisense‐injection was used to determine the role of specific G‐protein α subunits in mediating the inhibitory effects of LA. Using chimeric receptor constructs we investigated which domains of the muscarinic receptors contribute to the binding site for LA. Lidocaine inhibited m3‐signalling in a concentration‐dependent, reversible, non‐competitive manner with an IC50 of 370 nM, approximately 21 fold higher than the IC50 (18 nM) reported for m1 receptors. Intracellular inhibition of both signalling pathways by LA was similar, and dependent on the Gq‐ protein α subunit. In contrast to results reported for the m1 receptor, the m3 receptor lacks the major extracellular binding site for charged LA. The N‐terminus and third extracellular loop of the m1 muscarinic receptor molecule were identified as requirements to obtain extracellular inhibition by charged LA. British Journal of Pharmacology (2001) 133, 207–216; doi:10.1038/sj.bjp.0704040