The opposing action of dopamine and acetylcholine has long been known to play an important role in basal ganglia physiology. However, the quantitative analysis of dopamine and acetylcholine signal interaction has been difficult to perform in the native context because the striatum comprises mainly two subtypes of medium-sized spiny neurons (MSNs) on which these neuromodulators exert different actions. We used biosensor imaging in live brain slices of dorsomedial striatum to monitor changes in intracellular cAMP at the level of individual MSNs. We observed that the muscarinic agonist oxotremorine decreases cAMP selectively in the MSN subpopulation that also expresses D|1| dopamine receptors, an action mediated by the M|4| muscarinic receptor. This receptor has a high efficacy on cAMP signaling and can shut down the positive cAMP response induced by dopamine, at acetylcholine concentrations which are consistent with physiological levels. This supports our prediction based on theoretical modeling that acetylcholine could exert a tonic inhibition on striatal cAMP signaling, thus supporting the possibility that a pause in acetylcholine release is required for phasic dopamine to transduce a cAMP signal in D1 MSNs. In vivo experiments with acetylcholinesterase inhibitors donepezil and tacrine, as well as with the positive allosteric modulators of M|4| receptor VU0152100 and VU0010010 show that this effect is sufficient to reverse the increased locomotor activity of DAT-knockout mice. This suggests that M|4| receptors could be a novel therapeutic target to treat hyperactivity disorders.