Avian influenza viruses of the H7 subtype have caused multiple outbreaks in domestic poultry and represent a significant threat to public health due to their propensity to occasionally transmit directly from birds to humans. In order to better understand the cross species transmission potential of H7 viruses in nature, we performed biological and molecular characterizations of an H7N3 virus isolated from mallards in Canada in 2001. Sequence analysis that the HA gene of the mallard H7N3 virus shares 97% identity with the highly pathogenic avian influenza (HPAI) H7N3 virus isolated from a human case in British Columbia, Canada in 2004. The mallard H7N3 virus was able to replicate in quail and chickens, and transmitted efficiently in quail but not in chickens. Interestingly, although this virus showed preferential binding to analogs of avian-like receptors with sialic acid (SA) linked to galactose in an α2–3 linkage (SAα2–3Gal), it replicated to high titers in cultures of primary human airway epithelial (HAE) cells, comparable to an avian H9N2 influenza virus with human-like α2–6 linkage receptors (SAα2–6Gal). In addition, the virus replicated in mice and ferrets without prior adaptation and was able to transmit partially among ferrets. Our findings highlight the importance and need for systematic in vitro and in vivo analysis of avian influenza viruses isolated from the natural reservoir in order to define their zoonotic potential.