How inflammatory responses are mechanistically modulated by nicotinic acetylcholine receptors (nAChR), especially by receptors composed of alpha7 (α7) subunits, is poorly defined. This includes a precise definition of cells that express α7 and how these impact on innate inflammatory responses. To this aim we used mice generated through homologous recombination that express an Ires-Cre-recombinase bi-cistronic extension of the endogenous α7 gene that when crossed with a reporter mouse expressing Rosa26-LoxP (yellow fluorescent protein (YFP)) marks in the offspring those cells of the α7 cell lineage (α7lin+). In the adult, on average 20–25 percent of the total CD45+ myeloid and lymphoid cells of the bone marrow (BM), blood, spleen, lymph nodes, and Peyers patches are α7lin+, although variability between litter mates in this value is observed. This hematopoietic α7lin+ subpopulation is also found in Sca1+cKit+ BM cells suggesting the α7 lineage is established early during hematopoiesis and the ratio remains stable in the individual thereafter as measured for at least 18 months. Both α7lin+ and α7lin– BM cells can reconstitute the immune system of naïve irradiated recipient mice and the α7lin+:α7lin– beginning ratio is stable in the recipient after reconstitution. Functionally the α7lin+:α7lin– lineages differ in response to LPS challenge. Most notable is the response to LPS as demonstrated by an enhanced production of IL-12/23(p40) by the α7lin+ cells. These studies demonstrate that α7lin+ identifies a novel subpopulation of bone marrow cells that include hematopoietic progenitor cells that can re-populate an animal’s inflammatory/immune system. These findings suggest that α7 exhibits a pleiotropic role in the hematopoietic system that includes both the direct modulation of pro-inflammatory cell composition and later in the adult the role of modulating pro-inflammatory responses that would impact upon an individual’s lifelong response to inflammation and infection.