Nicotinic acetylcholine receptors (nAChR) are pentameric ligand gated ion channels whose activity can be modulated by endogenous neurotransmitters as well as by synthetic ligands that bind the same or distinct sites from the natural ligand. The subtype of α7 nAChR has been considered as a potenial therapeutic target for Alzheimer's disease, schizophrenia and other neurological and psychiatric disorders. Here we have developed a homology model of α7 nAChR based on two high resolution crystal structures with Brookhaven Protein Data Bank (PDB) codes 2QC1 and 2WN9 for threading on one monomer and then for building a pentamer, respectively. A number of small molecule binding sites are identified using Pocket Finder (J. An, M. Tortov, and R. Abagyan, Molecular & Cellular Proteomics, 4.6, 752-761 (2005)) of Internal Coordinate Mechanics (ICM). Remarkably, these computer-identified sites match perfectly with ordered solvent densities found in the high-resolution crystal structure of α1 nAChR, suggesting that the surface cavities in the α7 nAChR model are likely binding sites of small molecules. A high throughput virtual screening by flexible ligand docking of 5008 small molecule compounds was performed at three potential allosteric modulator (AM) binding sites of α7 nAChR using Molsoft ICM software (R. Abagyan, M. Tortov and D. Kuznetsov, J Comput Chem 15, 488-506, (1994)). Some experimentally verified allosteric modulators of α7 like CCMI comp-6, LY 7082101, 5-HI, TQS, PNU-120596, genistein, and NS-1738 ranked among top 100 compounds, while the rest of the compounds in the list could guide further search for new allosteric modulators.