Cholinergic signaling is critical for an individual to react appropriately and adaptably to salient stimuli while navigating a complex environment. The cholinergic neurotransmitter system drives attention to salient stimuli, such as stressors, and aids in orchestrating the proper neural and behavioral response. Fine-tuned regulation of the cholinergic system has been linked to appropriate stress responses and subsequent mood regulation while dysregulation has been implicated in mood disorders. Among the multiple layers of regulation are cholinergic protein modulators. Here, we use validated models of experiential-based affective disorders to investigate differences in responses to stress in a genetic mouse model of cholinergic dysregulation based on the loss of protein modulator. The lynx2 nicotinic receptor modulatory protein provides negative cholinergic regulation within the amygdala, medial prefrontal cortex, and other brain regions. We discovered here that lynx2 knockout (KO) mice demonstrate an inability to update behavior with an inability to extinguish learned fear during a fear extinction test. We also observed, under an increased stress load following exposure to chronic social defeat stress (CSDS) paradigm, there was a unified resilience phenotype in lynx2KO mice, as opposed to the wild-type cohort which was split between resilience and susceptible phenotypes. Furthermore, we provide evidence for the functional role of α7 nicotinic receptor subtypes by phenotypic rescue with MLA or crossing with an α7 null mutant mouse (e.g. lynx2/α7 double KO mice). We demonstrate a direct physical interaction between lynx2 and α7 nAChR by co-immunoprecipitation of complexes from mouse BLA extracts. The genetic predisposition to heightened basal anxiety-like behavior and altered cholinergic signaling impairs individual behavior responses stressors. Together, these data indicate that the effects of social stress can be influenced by baseline genetic factors involved in anxiety regulation.