The neuronal α7 nicotinic receptor subunit gene (CHRNA7) is partially duplicated in the human genome forming a hybrid gene (CHRFAM7A) with the novel FAM7A gene. The hybrid gene transcript, dupα7, has been identified in brain, immune cells, and the HL-60 cell line, although its translation and function are still unknown. In this study, dupα7 cDNA has been cloned and expressed in GH4C1 cells and Xenopus oocytes to study the pattern and functional role of the expressed protein. Our results reveal that dupα7 transcript was natively translated in HL-60 cells and heterologously expressed in GH4C1 cells and oocytes. Injection of dupα7 mRNA into oocytes failed to generate functional receptors, but when co-injected with α7 mRNA at α7/dupα7 ratios of 5:1, 2:1, 1:1, 1:5, and 1:10, it reduced the nicotine-elicited α7 current generated in control oocytes (α7 alone) by 26, 53, 75, 93, and 94%, respectively. This effect is mainly due to a reduction in the number of functional α7 receptors reaching the oocyte membrane, as deduced from α-bungarotoxin binding and fluorescent confocal assays. Two additional findings open the possibility that the dominant negative effect of dupα7 on α7 receptor activity observed in vitro could be extrapolated to in vivo situations. (i) Compared with α7 mRNA, basal dupα7 mRNA levels are substantial in human cerebral cortex and higher in macrophages. (ii) dupα7 mRNA levels in macrophages are down-regulated by IL-1β, LPS, and nicotine. Thus, dupα7 could modulate α7 receptor-mediated synaptic transmission and cholinergic anti-inflammatory response.