Muslims believed that this verse refers to a special [miraculous] night journey to Jerusalem, where he ascended to heaven and met with Allah. The Mosque in Jerusalem is supposedly built to commemorate this event. Interestingly, however, nothing in this mosque tells us about this event. Instead, the whole mosque is written with Qur'anic verses against Jews and Christians. It should be remembered, however, the after the event, Muhammad returned to earth to continue till the end of his life. This is quite unlike the ascension of Enoch, Elijah and Jesus.
"He speaks, but not with tongues as men do. He speaks to some of His servants without intervention of another, even as He spoke to Moses, and to Muhammad on the night of ascension to heaven. He speaks to others by instrumentality of Gabriel, and this is the usual way in which He communicates His will to the prophets." (Al-Ghazzali, quoted in Hughes's Dictionary, p.147)
For more details, see the entry NIGHT JOURNEY
see The one coming with the clouds for a more detailed discussion.