The α7 nicotinic acetylcholine receptor (nAChR) is highly expressed in different regions of the brain and is associated with cognitive function as well as anxiety. Agonists and positive allosteric modulators (PAMs) of the α7 subtype of nAChRs have been shown to improve cognition. Previously nicotine, which activates both α7 and non-α7 subtypes of nAChRs, has been shown to have an anxiogenic effect in behavioral tests. In this study, we compared the effects of the α7-selective agonist (PNU-282987) and PAM (PNU-120596) in a variety of behavioral tests in Sprague Dawley rats to look at their effects on learning and memory as well as anxiety. We found that neither PNU-282987 nor PNU-120596 improved spatial-learning or episodic memory by themselves. However when cognitive impairment was induced in the rats with scopolamine (1 mg/kg), both PNU-120596 and PNU-282987 were able to reverse this memory impairment and restore it back to normal levels. While PNU-120596 reversed the scopolamine-induced cognitive impairment, it did not have any adverse effect on anxiety. PNU-282987 on the other hand displayed an increase in anxiety-like behavior at a higher dose (10 mg/kg) that was significantly reduced by the serotonin 5-HT1a receptor antagonist WAY-100135. However the α7 receptor antagonist methyllycaconitine was unable to reverse these anxiety-like effects seen with PNU-282987. These results suggest that α7 nAChR PAMs are pharmacologically advantageous over agonists, and should be considered for further development as therapeutic drugs targeting the α7 receptors.