Patients with dementia with Lewy bodies (DLB) commonly experience psychotic symptoms, most notably visual hallucinations. Previously, it has been shown that visual hallucinations in DLB are associated with reduced cortical choline acetyltransferase activity, a marker of cholinergic innervation, but not with predominantly postsynaptic muscarinic M1 receptor binding. In the present investigation, nicotinic acetylcholine receptor (nAChR) levels in the temporal cortex (Brodmann's areas [BA] 20 and 36) were measured in a group of 24 prospectively assessed DLB patients; comparisons were made between groups with or without visual and auditory hallucinations and delusional misidentification. Visual hallucinations and delusional misidentification were associated with lower [(125)I]alpha bungarotoxin binding in areas 36 and 20 (P<.05), but not with changes in [(3)H]epibatidine binding. There were no significant associations with auditory hallucinations. [(3)H]epibatidine, but not [(125)I]alpha bungarotoxin, binding for all DLB cases was reduced compared to controls (P<.001). Loss of cortical alpha 7 nicotinic receptors may contribute to hallucinations and delusional misidentification in DLB, with implications for treatment and understanding the mechanisms of psychotic symptoms in dementia.