Neurogenesis in the dentate gyrus occurs throughout adult mammalian life and is essential for proper hippocampal function. Early in their development, adult-born neurons express homomeric alpha7-containing nicotinic acetylcholine receptors (alpha7-nAChRs) and receive direct cholinergic innervation. We show here that functional alpha7-nAChRs are necessary for normal survival, maturation, and integration of adult-born neurons in the dentate gyrus. Stereotaxic retroviral injection into the dentate gyrus of wild-type and alpha7-knock-out (alpha7KO) male and female mice was used to label and birthdate adult-born neurons for morphological and electrophysiological measures; BrdU (5-bromo-2-deoxyuridine) injections were used to quantify cell survival. In alpha7KO mice, we find that adult-born neurons develop with truncated, less complex dendritic arbors and display GABAergic postsynaptic currents with immature kinetics. The neurons also have a prolonged period of GABAergic depolarization characteristic of an immature state. In this condition, they receive fewer spontaneous synaptic currents and are more prone to die during the critical period when adult-born neurons are normally integrated into behaviorally relevant networks. Even those adult-born neurons that survive the critical period retain long-term dendritic abnormalities in alpha7KO mice. Interestingly, local infection with retroviral constructs to knockdown alpha7-mRNA mimics the alpha7KO phenotype, demonstrating that the relevant alpha7-nAChR signaling is cell autonomous. The results indicate a profound role for alpha7-nAChRs in adult neurogenesis and predict that alpha7-nAChR loss will cause progressive impairment in hippocampal circuitry and function over time as fewer neurons are added to the dentate gyrus and those that are added integrate less well.