Patients with schizophrenia present with deficits in specific areas of cognition. These are quantifiable by neuropsychological testing and can be clinically observable as negative signs. Concomitantly, they self-administer nicotine in the form of cigarette smoking. Nicotine dependence is more prevalent in this patient population when compared to other psychiatric conditions or to non-mentally ill people. The target for nicotine is the neuronal nicotinic acetylcholine receptor (nAChR). There is ample evidence that these receptors are involved in normal cognitive operations within the brain. This review describes neuronal nAChR structure and function, focusing on both cholinergic agonist-induced nAChR desensitization and nAChR up-regulation. The several mechanisms proposed for the nAChR up-regulation are examined in detail. Desensitization and up-regulation of nAChRs may be relevant to the physiopathology of schizophrenia. The participation of several subtypes of neuronal nAChRs in the cognitive processing of non-mentally ill persons and schizophrenic patients is reviewed. The role of smoking is then examined as a possible cognitive remediator in this psychiatric condition. Finally, pharmacological strategies focused on neuronal nAChRs are discussed as possible therapeutic avenues that may ameliorate the cognitive deficits of schizophrenia.