Nicotinic acetylcholine receptors (nAChRs) containing alpha7 subunits are thought to assemble as homomers. alpha7-nAChR function has been implicated in learning and memory, and alterations of alpha7-nAChR have been found in patients with Alzheimer's disease (AD). Here we report findings consistent with a novel, naturally occurring nAChR subtype in rodent, basal forebrain cholinergic neurons. In these cells, alpha7 subunits are coexpressed, colocalize, and coassemble with beta2 subunit(s). Compared with homomeric alpha7-nAChRs from ventral tegmental area neurons, functional, presumably heteromeric alpha7beta2-nAChRs on cholinergic neurons freshly dissociated from medial septum/diagonal band (MS/DB) exhibit relatively slow kinetics of whole-cell current responses to nicotinic agonists and are more sensitive to the beta2 subunit-containing nAChR-selective antagonist, dihydro-beta-erythroidine (DHbetaE). Interestingly, presumed, heteromeric alpha7beta2-nAChRs are highly sensitive to functional inhibition by pathologically relevant concentrations of oligomeric, but not monomeric or fibrillar, forms of amyloid beta(1-42) (Abeta(1-42)). Slow whole-cell current kinetics, sensitivity to DHbetaE, and specific antagonism by oligomeric Abeta(1-42) also are characteristics of heteromeric alpha7beta2-nAChRs, but not of homomeric alpha7-nAChRs, heterologously expressed in Xenopus oocytes. Moreover, choline-induced currents have faster kinetics and less sensitivity to Abeta when elicited from MS/DB neurons derived from nAChR beta2 subunit knock-out mice rather than from wild-type mice. The presence of novel, functional, heteromeric alpha7beta2-nAChRs on basal forebrain cholinergic neurons and their high sensitivity to blockade by low concentrations of oligomeric Abeta(1-42) suggests possible mechanisms for deficits in cholinergic signaling that could occur early in the etiopathogenesis of AD and might be targeted by disease therapies.