The α7 nicotinic acetylcholine receptor (nAChR) was recently described as an anti-inflammatory target in both macrophages and T cells. Its expression by immune cells may explain the epidemiological data claiming a negative link between cigarette smoking and several inflammatory diseases. In this study, we determined the immunological effects of α7 nAChR activation by nicotine. Our results indicate that the α7 nAChR is expressed on the surface of CD4+ T cells and that this expression is up-regulated upon immune activation. Nicotine reduced T cell proliferation in response to an encephalitogenic Ag, as well as the production of Th1 (TNF-α and IFN-γ) and Th17 cytokines (IL-17, IL-17F, IL-21, and IL-22). IL-4 production was increased in the same setting. Attenuation of the Th1 and Th17 lineages was accompanied by reduced T-bet (50%) and increased GATA-3 (350%) expression. Overall, nicotine induced a shift to the Th2 lineage. However, α7−/−-derived T cells were unaffected by nicotine. Furthermore, nicotine reduced NF-κB-mediated transcription as measured by IL-2 and IκB transcription. In vivo, administration of nicotine (2 mg/kg s.c.) suppressed the severity of CD4+ T cell-mediated disease experimental autoimmune encephalomyelitis. α7−/− mice were refractory to nicotine treatment, although disease severity in those animals was reduced, due to impairment in Ag presentation. Accordingly, CD4+ and CD11b+ cells infiltration into the CNS, demyelination, and axonal loss were reduced. Our data implicate a role for the α7 nAChR in immune modulation and suggest that α7 nAChR agonists may be effective in the treatment of inflammatory disorders.