Evidence suggests that α7 nicotinic acetylcholine receptor (α7 nAChR) in the central nervous system has a critical role in the regulation of microglial function and neuroinflammation associated with the pathophysiology of major depressive disorder. The objectives of the present study were to determine the effects of PNU 120596, an α7 nAChR positive allosteric modulator (PAM), on depressive-like behavior and expression of ionized calcium binding adaptor molecule 1 (Iba-1), a microglial marker, in male C57BL/6J mice following lipopolysaccharide (LPS) administration, an animal model for depressive-like behavior. Forced swim test (FST), tail suspension test (TST), and sucrose preference test were used to determine the effects of PNU 120596 on depressive-like behavior, measured by increased immobility time or decreased sucrose preference. We also examined the effects of PNU 120596 on Iba-1 expression by using Western blot analysis and immunofluorescence staining in the hippocampus and prefrontal cortex, the brain regions implicated in major depressive disorder. Administration of LPS (1 mg/kg, i.p.) significantly increased immobility time during FST and TST and decreased sucrose preference. The PNU 120596 (1 or 4 mg/kg, i.p.) dose-dependently prevented LPS-induced depressive-like behavior during FST, TST, and sucrose preference test. The PNU 120596 (1 or 4 mg/kg) alone did not show any significant alteration on immobility time and sucrose preference. Pretreatment of methyllycaconitine (3 mg/kg, i.p.), an α7 nAChR antagonist, significantly prevented the antidepressant-like effects of PNU (4 mg/kg). Similarly, the PNU 120596 (4 mg/kg, i.p.) significantly reduced LPS-induced increased expression of Iba-1 in the hippocampus or prefrontal cortex. Overall, these results suggest that PNU 120596 reduces LPS-induced depressive-like behavior and microglial activation in the hippocampus and prefrontal cortex in mice. Therefore, α7 nAChR PAMs could be developed as potential therapeutic utility for the treatment of major depressive disorder in humans.