Nicotine exerts its behavioral and additive actions through a family of brain nicotinic acetylcholine receptors (nAChRs). Enhancing α7-type nAChR signaling improves symptoms in Alzheimer's disease and schizophrenia. The pharmaceutical study of α7 receptors is hampered because these receptors do not form their functional pentameric structure in cell lines, and mechanisms that underlie α7 receptor assembly in neurons are not understood. Here, a genomic screening strategy solves this long-standing puzzle and identifies NACHO, a transmembrane protein of neuronal endoplasmic reticulum that mediates assembly of α7 receptors. NACHO promotes α7 protein folding, maturation through the Golgi complex, and expression at the cell surface. Knockdown of NACHO in cultured hippocampal neurons or knockout of NACHO in mice selectively and completely disrupts α7 receptor assembly and abolishes α7 channel function. This work identifies NACHO as an essential, client-specific chaperone for nAChRs and has implications for physiology and disease associated with these widely distributed neurotransmitter receptors.