The weapon, which belonged to Alexander Davison, was recently on display at the National Maritime Museum in Greenwich.
Cuttlestones, which is auctioning the weapon at Penkridge on Friday, said it expected the sword-pistol to sell for £10,000 to £15,000.
It said to think “you could be holding a pistol” which may have been used by Nelson was” tremendously exciting”.
“A few years ago now the descendants of Davison, who lived in France, decided to put a sale together of his items and they made millions of pounds.
“It’s as close as we know that it [the sword-pistol] is thought to have belonged to Lord Nelson.”
The weapon, which has a 65cm [25in] sword blade attached, was made by firearms manufacturer HW Mortimer in 1805.
Mr Gamble added: “You’d engage the enemy in hand-to-hand combat and if you thought you were losing, you’d shoot them as a secondary option.
“It was a fashionable weapon for a short period of time.”
Davison first met Nelson in Quebec in 1782 and the two remained in close contact until Nelson’s death at the Battle of Trafalgar in 1805.
In 1804 Davison was jailed for six months for election fraud following a failed attempt to become a Member of Parliament.
He was again found guilty of fraud for falsifying purchase orders and receipts in 1809. Upon release he lived quietly in Brighton until his death in 1829