Multiple sclerosis (MS) is a chronic relapsing-remitting inflammatory disease of the central nervous system characterized by oligodendrocyte damage, demyelination and neuronal death. Genetic association studies have shown a two-fold or greater prevalence of the HLA-DRB1*1501 allele in the MS population compared with normal Caucasians. In discovery cohorts of Australasian patients with multiple sclerosis (total 2941 patients, 3008 controls) we examined the associations of twelve functional polymorphisms of P2X7, a microglial/macrophage receptor with proinflammatory effects when activated by extracellular ATP. In discovery cohorts, rs28360457, coding for Arg307Gln was associated with MS and combined analysis showed a two-fold lower minor allele frequency compared with controls (1.11% for MS and 2.15% for controls, p=0.0000071). Replication analysis of four independent European MS case-control cohorts (total 2140 cases and 2634 controls) confirmed this association (OR 0.69, p=0.026). A meta-analysis of all Australasian and European cohorts indicated that Arg307Gln confers a 1.8-fold protective effect on MS risk (OR 0.57, p=0.0000024). Fresh human monocytes heterozygous for Arg307Gln have >85% loss of 'pore' function of the P2X7 receptor measured by ATP-induced ethidium uptake. Analysis shows Arg307Gln always occurred with 270His suggesting a single 307Gln-270His haplotype which confers dominant negative effects on P2X7 function and protection against MS. Modelling based on the homologous zP2X4 receptor showed Arg307 is located in a region rich in basic residues located only 12Å from the ligand binding site. Our data show the protective effect against MS of a rare genetic variant of P2RX7 with heterozygotes showing near absent proinflammatory 'pore' function.