The α7 nicotinic acetylcholine receptor is a pentameric ligand-gated ion channel that plays an important role in cholinergic signaling throughout the nervous system. Its unique physiological characteristics and implications in neurological disorders and inflammation make it a promising but challenging therapeutic target. Positive allosteric modulators overcome limitations of traditional α7 agonists, but their potentiation mechanisms remain unclear. Here, we present high-resolution structures of α7-modulator complexes, revealing partially overlapping binding sites but varying conformational states. Structure-guided functional and computational tests suggest that differences in modulator activity arise from the stable rotation of a channel gating residue out of the pore. We extend the study using a time-resolved cryoelectron microscopy (cryo-EM) approach to reveal asymmetric state transitions for this homomeric channel and also find that a modulator with allosteric agonist activity exploits a distinct channel-gating mechanism. These results define mechanisms of α7 allosteric modulation and activation with implications across the pentameric receptor superfamily.