Galantamine is an approved drug treatment for Alzheimer's disease. Initially identified as a weak cholinesterase inhibitor, we have established that galantamine mainly acts as an 'allosterically potentiating ligand (APL)' of nicotinic acetylcholine receptors (nAChR). Meanwhile other 'positive allosteric modulators (PAM)' of nAChR channel activity have been discovered, and for one of them a binding site within the transmembrane domain has been proposed. Here we show, by performing site-directed mutagenesis studies of ectopically expressed chimeric chicken α7/mouse 5-hydroxytryptamine 3 receptor-channel complex, in combination with whole-cell current measurements, in the presence and absence of galantamine, that the APL binding site is different from the proposed PAM binding site. We demonstrate that residues T197, I196, and F198 of ß-strand 10 represent major elements of the galantamine binding site. Residue K123, earlier suggested as being 'close to' the APL binding site, is not part of this site but rather appears to play a role in coupling of agonist binding to channel opening and closing. Our data confirm our earlier results that the galantamine binding site is different from the ACh binding site. Both sites are in close proximity and hence may influence each other in a synergistic fashion. Other interesting areas identified in the present study are a 'hinge' region around and containing residues F122, K123, and K143 possibly being involved in relaying the signal of agonist binding to gating of the transmembrane channel, and a 'folding centre', with P119 as the dominating residue, that crucially positions the agonist binding site with respect to the hinge region.