Acetylcholine is synthesized from choline and acetyl-CoA by the enzyme choline acetyltransferase. Once released into the synaptic cleft, acetylcholine binds to its receptors to exert its action. It is rapidly degraded by the enzyme acetylcholinesterase (AChE) into choline and acetate, terminating its action. This rapid degradation is crucial for the proper functioning of the nervous system.