Patients with dry eye disease (DED) often exhibit neurological abnormalities and may even suffer from neuropathic pain and pain-related anxiety or depression. However, addressing nerve abnormalities in DED remains a formidable challenge, as current therapies fail to halt disease progression. Our study found that activating α-7 nicotinic acetylcholine receptor (α7nAChR), a pivotal regulator in the anti-inflammatory pathway connecting the nervous and immune systems, effectively restores corneal epithelium integrity and enhances nerve sensitivity in DED, pointing to its promising therapeutic potential. Furthermore, we have revealed that α7nAChR stimulates genes involved in immune-mediated inflammatory progression and neuroregulation, inhibits the expression of transient receptor potential vanilloid-1 (TRPV1), reinstates corneal nerve density, and alleviates anxiety-like behaviors associated with severe DED by downregulating the proportion of CD86+ M1 macrophages (pro-inflammatory phenotypes). In summary, our findings underscore the activation of α7nAChR as a pioneering therapeutic approach for preserving corneal nerves balance and controlling inflammation in DED.