A growing body of evidence indicates that neuronal nicotinic acetylcholine receptors (nAChRs), in addition to promoting fast cholinergic transmission, may modulate other neuronal activities within the central nervous system (CNS). In particular, the alpha7 nAChR is highly permeable to Ca2+ and may serve a distinct role in regulating neuronal plasticity. By elevating intracellular Ca2+ levels in discrete neuronal locations, these ligand-gated ion channels may influence numerous physiological processes in developing and adult CNS. In this article, we review evidence that both pre- and postsynaptic alpha7 nAChRs modulate transmitter release in the brain and periphery through Ca2+-dependent mechanisms. The possible role of alpha7 nAChRs in regulating neuronal growth and differentiation in developing CNS is also evaluated. We consider an interaction between cholinergic and glutamatergic transmission and propose a hypothesis on the possible coregulation of intracellular Ca2+ by N-methyl-D-aspartate (NMDA) receptors and alpha7 nAChRs. Finally, the clinical significance of alterations in the normal function of alpha7 nAChRs is discussed as it pertains to prenatal nicotine exposure, schizophrenia, and epilepsy.