There is substantial evidence that cholinergic system function impairment plays a significant role in many central nervous system (CNS) disorders. During the past three decades, muscarinic receptors (mAChRs) have been implicated in various pathologies and have been prominent targets of drug-design efforts. However, due to the high sequence homology of the orthosteric binding site, many drug candidates resulted in limited clinical success. Although several advances in treating peripheral pathologies have been achieved, targeting CNS pathologies remains challenging for researchers. Nevertheless, significant progress has been made in recent years to develop functionally selective orthosteric and allosteric ligands targeting the mAChRs with limited side effect profiles. This review highlights past efforts and focuses on recent advances in drug design targeting these receptors for Alzheimer’s disease (AD), schizophrenia (SZ), and depression.