Tools from molecular biology, combined with in vivo optical imaging techniques, provide new mechanisms for noninvasively observing brain processes. Current approaches primarily probe cell-based variables, such as cytosolic calcium or membrane potential, but not cell-to-cell signaling. We devised cell-based neurotransmitter fluorescent engineered reporters (CNiFERs) to address this challenge and monitor in situ neurotransmitter receptor activation. CNiFERs are cultured cells that are engineered to express a chosen metabotropic receptor, use the G(q) protein-coupled receptor cascade to transform receptor activity into a rise in cytosolic [Ca(2+)] and report [Ca(2+)] with a genetically encoded fluorescent Ca(2+) sensor. The initial realization of CNiFERs detected acetylcholine release via activation of M1 muscarinic receptors. We used chronic implantation of M1-CNiFERs in frontal cortex of the adult rat to elucidate the muscarinic action of the atypical neuroleptics clozapine and olanzapine. We found that these drugs potently inhibited in situ muscarinic receptor activity.