A series of novel arylpyrid-3-ylmethanones (7a-aa) were designed as modulators of α7 nicotinic acetylcholine receptors (nAChRs). The methanones were found to be type I positive allosteric modulators (PAMs) of human α7 nAChRs expressed in Xenopus ooctyes. Structure-activity relationship (SAR) studies resulted in the identification of compound 7v as a potent and efficacious type I PAM with maximum modulation of a nicotine EC5 response of 1200% and EC50 = 0.18 μM. Compound 7z was active in reversing the effect of scopolamine in the novel object recognition (NOR) paradigm with a minimum effective ip dose of 1.0 mg/kg (2.7 μmol/kg). This effect was blocked by the selective α7 nAChR antagonist methyllycaconitine (MLA). These compounds are potent type I positive allosteric modulators of α7 nAChRs that may have therapeutic value in restoring impaired sensory gating and cognitive deficits in schizophrenia and Alzheimer's disease.