In this study, we investigated the effect of the downregulation of α7 nicotinic acetylcholine receptors (α7nAChRs) by Streptozotocin (STZ) on the level of cyclic nucleotides. Three groups of six rats each—Control, Sham (received an Intracerebroventricular injection of artificial cerebrospinal fluid, and STZ were formed. Except for the control group, all rats were anesthetized with 45 mg/kg of pentobarbitone. The STZ was administered intracerebroventricularly at a dose of 3 mg/kg to STZ group rats on Day 1 as well as Day 3 of an experimental period of 18 days. By using the Morris Water Maze (MWM) along with the Y-maze test, behavioral parameters were assessed, and biochemical analysis was assessed within the hippocampus, prefrontal cortex as well as amygdala of the rat brain. Statistical analysis was performed using repeated measures with one-way and two-way analysis of variance. Bonferroni and Student Newman–Keuls post hoc test was used to determine significance between experimental groups, with a significance threshold of p < 0.05. STZ administration resulted in a notable decline in the cognitive function of rats, as evidenced by longer transfer latency, reduced duration spent, and decreased overall distance covered within the designated quadrant (in percentage) in the MWM assessment. Moreover, STZ lowered the spontaneous change in behavior observed in the rodents during the Y-maze evaluation and decreased Cyclic Adenosine Monophosphate and Cyclic Guanosine Monophosphate (cyclic nucleotides) concentrations within the HIP, PFC, and Amygdale of rat brain regions. The α7nAChR downregulation may form a basis that could serve as a foundation for cognitive impairments alongside reduced cyclic nucleotides’ concentration in specific areas of the rat brain. Thus, cyclic nucleotides could be a probable target to stimulate the α7nAChR mediated mechanism in STZ-mediated conditions.