The prion protein (PrP(C)) is a conserved glycosylphosphatidylinositol-anchored cell surface protein expressed by neurons and other cells. Stress-inducible protein 1 (STI1) binds PrP(C) extracellularly, and this activated signaling complex promotes neuronal differentiation and neuroprotection via the extracellular signal-regulated kinase 1 and 2 (ERK1/2) and cAMP-dependent protein kinase 1 (PKA) pathways. However, the mechanism by which the PrP(C)-STI1 interaction transduces extracellular signals to the intracellular environment is unknown. We found that in hippocampal neurons, STI1-PrP(C) engagement induces an increase in intracellular Ca(2+) levels. This effect was not detected in PrP(C)-null neurons or wild-type neurons treated with an STI1 mutant unable to bind PrP(C). Using a best candidate approach to test for potential channels involved in Ca(2+) influx evoked by STI1-PrP(C), we found that α-bungarotoxin, a specific inhibitor for α7 nicotinic acetylcholine receptor (α7nAChR), was able to block PrP(C)-STI1-mediated signaling, neuroprotection, and neuritogenesis. Importantly, when α7nAChR was transfected into HEK 293 cells, it formed a functional complex with PrP(C) and allowed reconstitution of signaling by PrP(C)-STI1 interaction. These results indicate that STI1 can interact with the PrP(C)·α7nAChR complex to promote signaling and provide a novel potential target for modulation of the effects of prion protein in neurodegenerative diseases.