Dopaminergic receptor antagonism is a crucial component of all licensed treatments for psychosis, and dopamine dysfunction has been central to pathophysiological models of psychotic symptoms. Some clinical trials, however, indicate that drugs that act through muscarinic receptor agonism can also be effective in treating psychosis, potentially implicating muscarinic abnormalities in the pathophysiology of psychosis. Here, we discuss understanding of the central muscarinic system, and we examine preclinical, behavioural, post-mortem, and neuroimaging evidence for its involvement in psychosis. We then consider how altered muscarinic signalling could contribute to the genesis and maintenance of psychotic symptoms, and we review the clinical evidence for muscarinic agents as treatments. Finally, we discuss future research that could clarify the relationship between the muscarinic system and psychotic symptoms.