The M₃ muscarinic acetylcholine receptor (M3R) regulates many fundamental physiological functions. To identify novel M3R-interacting proteins, we used a recently developed yeast two-hybrid screen (split ubiquitin method) to detect interactions among membrane proteins. This screen led to the identification of many novel M3R-associated proteins, including the putative membrane protein transmembrane protein 147 (Tmem147). The amino acid sequence of Tmem147 is highly conserved among mammals, but its physiological roles are unknown at present. We initially demonstrated that Tmem147 could be coimmunoprecipitated with M3Rs in cotransfected mammalian cells (COS-7 cells). Confocal imaging studies showed that Tmem147 was localized to endoplasmic reticulum (ER) membranes and that the Tmem147/M3R interaction occurred in the ER of cotransfected COS-7 cells, resulting in impaired trafficking of the M3R to the cell surface. To study the role of Tmem147 in modulating M3R function in a more physiologically relevant setting, we carried out studies with H508 human colon cancer cells that endogenously express M3Rs and Tmem147. Treatment of H508 cells with carbachol, a hydrolytically stable acetylcholine analog, promoted H508 cell proliferation and activation of the mitogenic kinase, p90RSK. Small interfering RNA-mediated knockdown of Tmem147 expression significantly augmented the stimulatory effects of carbachol on H508 cell proliferation and p90RSK activation. These effects were associated with an increase in the density of cell surface M3Rs. Our data clearly indicate that Tmem147 represents a potent negative regulator of M3R function, most likely by interacting with M3Rs in an intracellular compartment (ER). These findings may lead to new strategies aimed at modulating M3R activity for therapeutic purposes.