Neuronal nicotinic acetylcholine receptors (NNRs) of the α7 subtype have been shown to contribute to the release of dopamine in the nucleus accumbens. The site of action and the underlying mechanism, however, are unclear. Here we applied a circuit modeling approach, supported by electrochemical in vivo recordings, to clarify this issue. Modeling revealed two potential mechanisms for the drop in accumbal dopamine efflux evoked by the selective α7 partial agonist TC-7020. TC-7020 could desensitize α7 NNRs located predominantly on dopamine neurons or glutamatergic afferents to them or, alternatively, activate α7 NNRs located on the glutamatergic afferents to GABAergic interneurons in the ventral tegmental area. Only the model based on desensitization, however, was able to explain the neutralizing effect of coapplied PNU-120596, a positive allosteric modulator. According to our results, the most likely sites of action are the preterminal α7 NNRs controlling glutamate release from cortical afferents to the nucleus accumbens. These findings offer a rationale for the further investigation of α7 NNR agonists as therapy for diseases associated with enhanced mesolimbic dopaminergic tone, such as schizophrenia and addiction.