A full-length clone coding for the rat alpha 7 nicotinic receptor subunit was isolated from an adult brain cDNA library and expressed in Xenopus oocytes. A significant proportion of the current through alpha 7-channels is carried by Ca2+. This Ca2+ influx then activates a Ca(2+)-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 alpha 7-channels and the Ca(2+)-dependent Cl- channels to be shifted in opposite directions. Under these conditions, agonist application activates a biphasic current with an initial inward current through alpha 7-channels followed by a niflumic acid- and fluflenamic acid-blockable outward current through Ca(2+)-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 Ca(2+)-activated Cl- channels, indicate that alpha 7-homooligomeric channels have a greater relative Ca2+ permeability than the other nicotinic ACh receptors. Furthermore, alpha 7-channels have an even greater relative Ca2+ permeability than the NMDA subtype of glutamate receptors. High levels of alpha 7-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 alpha 7-containing receptors may play a role in activating calcium-dependent mechanisms in specific neuronal populations of the adult rat limbic system.