Human genetic association studies have shown gene variants in the α5 subunit of the neuronal nicotinic receptor (nAChR) influence both ethanol and nicotine dependence. The α5 subunit is an accessory subunit that facilitates α4* nAChRs assembly in vitro. However, it is unknown whether this occurs in the brain, as there are few research tools to adequately address this question. As the α4*-containing nAChRs are highly expressed in the ventral tegmental area (VTA) we assessed the molecular, functional and pharmacological roles of α5 in α4*-containing nAChRs in the VTA. We utilized transgenic mice α5+/+(α4YFP) and α5-/-(α4YFP) that allow the direct visualization and measurement of α4-YFP expression and the effect of the presence (α5+/+) and absence of α5 (-/-) subunit, as the antibodies for detecting the α4* subunits of the nAChR are not specific. We performed voltage clamp electrophysiological experiments to study baseline nicotinic currents in VTA dopaminergic neurons. We show that in the presence of the α5 subunit, the overall expression of α4 subunit is increased significantly by 60% in the VTA. Furthermore, the α5 subunit strengthens baseline nAChR currents, suggesting the increased expression of α4* nAChRs to be likely on the cell surface. While the presence of the α5 subunit blunts the desensitization of nAChRs following nicotine exposure, it does not alter the amount of ethanol potentiation of VTA dopaminergic neurons. Our data demonstrates a major regulatory role for the α5 subunit in both the maintenance of α4*-containing nAChRs expression and in modulating nicotinic currents in VTA dopaminergic neurons. Additionally, the α5α4* nAChR in VTA dopaminergic neurons regulates the effect of nicotine but not ethanol on currents. Together, the data suggest that the α5 subunit is critical for controlling the expression and functional role of a population of α4*-containing nAChRs in the VTA.