A promising drug target currently under investigation to improve cognitive deficits in neuropsychiatric and neurological disorders is the neuronal nicotinic alpha7 acetylcholine receptor (α7nAChR). Improving cognitive impairments in diseases such as Alzheimer's (AD) and schizophrenia remains a large unmet medical need, and the α7nAChR has many properties that make it an attractive therapeutic target. The α7nAChR is a ligand gated ion channel that has particularly high permeability to Ca(2+) and is expressed in key brain regions involved in cognitive processes (e.g., hippocampus). The α7nAChRs are localized both pre-synaptically, where they can regulate neurotransmitter release, and post-synaptically where they can activate intracellular signaling cascades and influence downstream processes involved in learning and memory. In particular, activation of the α7nAChR with small molecule agonists enhances long-term potentiation, an in vitro model of synaptic plasticity, and improves performance across multiple cognitive domains in rodents, monkeys, and humans. Positive allosteric modulation of the α7nAChR offers an alternate approach to direct agonism that could prove to be particularly beneficial in certain disease populations where smoking nicotine is prevalent (e.g., schizophrenia) and could interfere with an orthosteric agonist approach. The current review focuses on the neurobiology of the α7nAChR, its role in cognition and the development status of some of the most promising molecules advancing for the treatment of cognitive dysfunction in disease.