The α7 nicotinic acetylcholine receptor (nAChR) is a promising drug target for a number of diseases ranging from schizophrenia and Alzheimer's disease to chronic pain and inflammatory diseases. Focusing on the central nervous system, we describe how endogenous and experimental compounds and proteins regulate expression and function of the α7 nAChR. Drug development efforts have hitherto focused on direct manipulation of the α7 nAChR, but it is still not clear, whether agonism/antagonism or allosteric modulation is preferable as a potential drug therapy. In addition, the action of such compounds in vivo is highly dependent on α7 nAChR-interacting proteins, such as RIC-3 and lynx1, which modulate expression and function of the receptor. These regulatory proteins are often not expressed in in vitro models used to study α7 nAChR function, and it is not known to what extent they are involved in diseases such as schizophrenia and Alzheimer's disease. Furthermore, α7 nAChR agonists and allosteric modulators differentially alter expression and functionality of the α7 nAChR with repeated administration, which suggests that there may be fundamentally different outcomes of long-term administration with these different types of compounds. Finally, we describe the special case of Aβ1-42 binding to the α7 nAChR, which may pose a unique challenge to drug development of α7 nAChR-specific ligands for Alzheimer's disease. Hopefully, a greater knowledge of the many factors influencing α7 nAChR function as well as an increasing pipeline of specific drug candidates, enabling a more subtle manipulation of α7 nAChR function, may facilitate α7 nAChR drug development efforts.