The five human muscarinic acetylcholine receptors (M1-M5 mAChRs) are an important family of class A G protein-coupled receptors (GPCRs) that are activated by the neurotransmitter acetylcholine. Within the mAChR family, the M4 subtype has emerged as a drug target of high therapeutic interest due to its expression in regions of the brain that are rich in dopamine and dopamine receptors1. Multiple studies have implicated the M4 mAChR in regulating dopaminergic neurons that are involved in cognition and addiction. Excitingly the drug xanomeline, has recently shown significant benefits in a phase II clinical trial for schizophrenia2. Notably, xanomeline displays a complex and unique pharmacological profile. For example, xanomeline binds to all five mAChR subtypes with similar binding affinity, however, its shows functional selectivity for the M4 mAChR. Xanomeline also displays persistent binding profile that is wash-resistant, as well as a unique interaction with positive allosteric modulators at the M2 mAChR subtype that does not take place with other orthosteric agonists, or at other mAChR subtypes3,4. To gain structural insight into the unique pharmacological properties of xanomeline, we obtained a cryo-EM structure of xanomeline bound to the M4 mAChR together with its transducer partner, the heterotrimeric Gi protein. Unexpectedly, xanomeline was found to occupy both the orthosteric and canonical mAChR allosteric binding site. Further pharmacological interrogation revealed xanomeline can act as an allosteric modulator and that its unique interaction with allosteric modulators at the M2 mAChR is likely due to a competitive interaction that occur in the allosteric binding site. Understanding the complex molecular mechanisms of xanomeline is expected to aid the development of further improved M4 mAChR selective compounds.