The neurotransmitter acetylcholine (ACh) has a crucial role in central and neuromuscular synapses of the cholinergic system. After release into the synaptic cleft, ACh is rapidly degraded by acetylcholinesterase (AChE). We have identified a mutation in the ache gene of the zebrafish, which abolishes ACh hydrolysis in homozygous animals completely. Embryos are initially motile but subsequently develop paralysis. Mutant embryos show defects in muscle fiber formation and innervation, and primary sensory neurons die prematurely. The neuromuscular phenotype in ache mutants is suppressed by a homozygous loss-of-function allele of the alpha-subunit of the nicotinic acetylcholine receptor (nAChR), indicating that the impairment of neuromuscular development is mediated by activation of nAChR in the mutant. Here we provide genetic evidence for non-classical functions of AChE in vertebrate development.