A full-length clone coding for the rat α7 nicotinic receptor subunit was isolated from an adult brain cDNA library and expressed in Xenopus oocytes. A significant proportion of the current through α7-channels is carried by Ca2+. This Ca2+ influx then activates a Ca2+-dependent Cl conductance, which is blocked by the chloride channel blockers niflumic and fluflenamic acid. Increasing the external NaCl concentration caused the reversal potentials for the α7-channels and the Ca2+-dependent Cl- channels to be shifted in opposite directions. Under these conditions, agonist application activates a biphasic current with an initial inward current through α7- channels followed by a niflumic acid- and fluflenamic acid-blockable outward current through Ca2+-dependent Cl channels. A relative measure of the Ca2+ permeability was made by measuring the shift in the reversal potential caused by adding 10 mM Ca2+ to the external solution. Measurements made in the absence of Cl-, to avoid artifactual current through Ca2+-activated Cl channels, indicate that α7-homooligomeric channels have a greater relative Ca2+ permeability than the other nicotinic ACh receptors. Furthermore, α7-channels have an even greater relative Ca2+ permeability than the NMDA subtype of glutamate receptors. High levels of α7-transcripts were localized by in situ hybridization in the olfactory areas, the hippocampus, the hypothalamus, the amygdala, and the cerebral cortex. These results imply that α7-containing receptors may play a role in activating calcium- dependent mechanisms in specific neuronal populations of the adult rat limbic system.