The alpha 7 subunit of the nicotinic acetylcholine receptor (alpha7nAChR) is expressed in the prefrontal cortex (PFC), a brain region where these receptors are implicated in cognitive function and in the pathophysiology of schizophrenia. Activation of this receptor is dependent on release of acetylcholine (ACh) from axon terminals that contain the vesicular acetylcholine transporter (VAChT). Since rat and mouse models are widely used for studies of specific abnormalities in schizophrenia, we sought to determine the subcellular location of the alpha7nAChR with respect to VAChT storage vesicles in axon terminals in the PFC in both species. For this, we used dual electron microscopic immunogold and immunoperoxidase labeling of antisera raised against the alpha7nAChR and VAChT. In both species, the alpha7nAChR-immunoreactivity ((-)ir) was principally identified within dendrites and dendritic spines, receptive to axon terminals forming asymmetric excitatory-type synapses, but lacking detectable alpha7nAChR or VAChT-ir. Quantitative analysis of the rat PFC revealed that of alpha7nAChR-labeled neuronal profiles, 65% (299/463) were postsynaptic structures (dendrites and dendritic spine) and only 22% (104/463) were axon terminals or small unmyelinated axons. In contrast, VAChT was principally localized to varicose vesicle-filled axonal profiles, without recognized synaptic specializations (n=240). Of the alpha7nAChR-labeled axons, 47% (37/79) also contained VAChT, suggesting that ACh release is autoregulated through the presynaptic alpha7nAChR. The VAChT-labeled terminals rarely formed synapses, but frequently apposed alpha7nAChR-containing neuronal profiles. These results suggest that in rodent PFC, the alpha7nAChR plays a major role in modulation of the postsynaptic excitation in spiny dendrites in contact with VAChT containing axons.