cDNA and genomic clones encoding alpha 7, a novel neuronal nicotinic acetylcholine receptor (nAChR) alpha subunit, were isolated and sequenced. The mature alpha 7 protein (479 residues) has moderate homology with all other alpha and non-alpha nAChR subunits and probably assumes the same transmembrane topology. alpha 7 transcripts transiently accumulate in the developing optic tectum between E5 and E16. They are present in both the deep and the superficial layers of E12 tectum. In Xenopus oocytes, the alpha 7 protein assembles into a homo-oligomeric channel responding to acetylcholine and nicotine. The alpha 7 channel desensitizes very rapidly, rectifies strongly above -20 mV, and is blocked by alpha-bungarotoxin. A bacterial fusion protein encompassing residues 124-239 of alpha 7 binds labeled alpha-bungarotoxin. We conclude that alpha-bungarotoxin binding proteins in the vertebrate nervous system can function as nAChRs.