High mobility group box 1 (HMGB1) is an endogenous alarmin that drives the pathogenesis of neurodegenerative disorders including cognitive decline. Therefore, HMGB1 is thought to be a common biomarker as well as promising therapeutic target for neuroinflammation associated with neurocognitive disorders. Here, for the first time, we have unmasked the potential inhibitory effect of a novel receptor of HMGB1-CXCL12 complex; atypical chemokine receptor 3 (ACKR3/CXCR7) on HMGB1 induced glial phenotype switching, neuroinflammation, and subsequent memory loss. Upregulation of CXCR7 inhibits HMGB1-CXCL12 complex induced peripheral immune cells infiltration to CNS by regulating blood-brain barrier (BBB) integrity in HMGB1 induced dementia model of mice. Whereas, gene knockdown study by RNA interference (non-invasive intranasal delivery to animal model) shows CXCR7 ablation aggravates inflammatory responses in hippocampus region and immune cell infiltration to CNS tissue by breached BBB. This study also indicates the important role of CXCR7 molecule in maintaining CNS homeostasis by balancing M1/M2 microglia, A1/A2 astrocytes, long term potentiation/long term depression markers which ultimately ameliorates HMGB1 induced neurodegeneration, synaptic depression and memory loss (assessed by both radial arm maze and Morris water maze) in male mice model of dementia. Overall, the study summarizes several significant protective functions afforded by CXCR7 against HMGB1 induced disbalance in neuroimmunological axis, neurodegeneration and memory loss and thereby provides a new paradigm for strategic development of novel therapeutics against neurodegenerative diseases with dementia as a common symptom.