Human soluble interleukin-7 receptor (sIL7R)α circulates in high molar excess compared with IL-7, but its biology remains unclear. We demonstrate that sIL7Rα has moderate affinity for IL-7 but does not bind thymic stromal lymphopoietin. Functionally, sIL7Rα competes with cell-associated IL-7 receptor to diminish excessive IL-7 consumption and, thus, enhances the bioactivity of IL-7 when the cytokine is limited, as it is presumed to be in vivo. IL-7 signaling in the presence of sIL7Rα also diminishes expression of CD95 and suppressor of cytokine signaling 1, both regulatory molecules. Murine models confirm diminished consumption of IL-7 in the presence of sIL7Rα and also demonstrate a potentiating effect of sIL7Rα on IL-7–mediated homeostatic expansion and experimental autoimmune encephalomyelitis exacerbation. In multiple sclerosis and several other autoimmune diseases, IL7R genotype influences susceptibility. We measured increased sIL7Rα levels, as well as increased IL-7 levels, in multiple sclerosis patients with the predisposing IL7R genotype, consistent with diminished IL-7 consumption in vivo. This work demonstrates that sIL7Rα potentiates IL-7 bioactivity and provides a basis to explain the increased risk of autoimmunity observed in individuals with genotype-induced elevations of sIL7Rα.