Considerable progress has been made in recent years towards the identification and characterisation of novel subtype-selective modulators of nicotinic acetylcholine receptors (nAChRs). In particular, this has focussed on modulators of alpha 7 nAChRs, a nAChR subtype that has been identified as a target for drug discovery in connection with a range of potential therapeutic applications. This review focusses upon alpha 7-selective modulators that bind to receptor sites other than the extracellular 'orthosteric' agonist binding site for the endogenous agonist acetylcholine (ACh). Such compounds include those that are able to potentiate responses evoked by orthosteric agonists such as ACh (positive allosteric modulators; PAMs) and those that are able to activate alpha 7 nAChRs by direct allosteric activation in the absence of an orthosteric agonist (allosteric agonists or 'ago-PAMs'). There has been considerable debate about the mechanism of action of alpha 7-selective PAMs and allosteric agonists, much of which has centred around identifying the location of their binding sites on alpha 7 nAChRs. Based on a variety of experimental evidence, including recent structural data, there is now clear evidence indicating that at least some alpha 7selective PAMs bind to an inter-subunit site located in the transmembrane domain. In contrast, there are differing hypotheses about the site or sites at which allosteric agonists bind to alpha 7 nAChRs. It will be argued that the available evidence supports the conclusion that direct allosteric activation by allosteric agonists/ago-PAMs occurs via the same inter-subunit transmembrane site that has been identified for several alpha 7-selective PAMs.