The CHRM2 gene is thought to be involved in neuronal excitability, synaptic plasticity and feedback regulation of acetylcholine release and has previously been implicated in higher cognitive processing. In a sample of 667 individuals from 304 families, we genotyped three single‐nucleotide polymorphisms (SNPs) in the CHRM2 gene on 7q31–35. From all individuals, standardized intelligence measures were available. Using a test of within‐family association, which controls for the possible effects of population stratification, a highly significant association was found between the CHRM2 gene and intelligence. The strongest association was between rs324650 and performance IQ (PIQ), where the T allele was associated with an increase of 4.6 PIQ points. In parallel with a large family‐based association, we observed an attenuated – although still significant – population‐based association, illustrating that population stratification may decrease our chances of detecting allele–trait associations. Such a mechanism has been predicted earlier, and this article is one of the first to empirically show that family‐based association methods are not only needed to guard against false positives, but are also invaluable in guarding against false negatives.