In the hippocampus, brain-derived neurotrophic factor (BDNF) regulates a number of synaptic components. Among these are nicotinic acetylcholine receptors containing alpha7 subunits (alpha7-nAChRs), which are interesting because of their relative abundance in the hippocampus and their high relative calcium permeability. We show here that BDNF elevates surface and intracellular pools of alpha7-nAChRs on cultured hippocampal neurons and that glutamatergic activity is both necessary and sufficient for the effect. Blocking transmission through NMDA receptors with APV blocked the BDNF effect; increasing spontaneous excitatory activity with the GABA(A) receptor antagonist bicuculline replicated the BDNF effect. BDNF antibodies blocked the BDNF-mediated increase but not the bicuculline one, consistent with enhanced glutamatergic activity acting downstream from BDNF. Increased alpha7-nAChR clusters were most prominent on interneuron subtypes known to directly innervate excitatory neurons. The results suggest that BDNF, acting through glutamatergic transmission, can modulate hippocampal output in part by controlling alpha7-nAChR levels.