α7 nicotinic acetylcholine receptor (α7nAChR, encoded by CHRNA7) is involved in dementia pathogenesis through cholinergic neurotransmission, neuroprotection and interactions with amyloid-β. Smoking promotes atherosclerosis and increases dementia risk, but nicotine exerts neuroprotective effect via α7nAChR in preclinical studies. No studies explored the gene-gene, gene-environment interactions between CHRNA7 polymorphism, apolipoprotein E (APOE) ε4 status and smoking on dementia risk. This case-control study recruited 254 late-onset Alzheimer's disease (LOAD) and 115 vascular dementia (VaD) cases (age ≥65) from the neurology clinics of three teaching hospitals in Taiwan during 2007-2010. Controls (N = 435) were recruited from health checkup programs and volunteers during the same period. Nine CHRNA7 haplotype-tagging single nucleotide polymorphisms representative for Taiwanese were genotyped. Among APOE ε4 non-carriers, CHRNA7 rs7179008 variant carriers had significantly decreased LOAD risk after correction for multiple tests (GG + AG vs. AA: adjusted odds ratio = 0.29, 95% confidence interval = 0.13-0.64, P = 0.002). Similar findings were observed for carriers of GT haplotype in CHRNA7 block4. A significant interaction was found between rs7179008, GT haplotype in block4 and APOE ε4 on LOAD risk. rs7179008 variant also reduced the detrimental effect of smoking on LOAD risk. No significant association was found between CHRNA7 and VaD. These findings help to understand dementia pathogenesis.