Background The α7 nicotinic acetylcholine receptor (α7 nAChR) negatively regulates the synthesis and release of pro-inflammatory cytokines by immune cells. Our previous studies showed that in encephalitogenic T cells, α7 nAChR expression is upregulated and that activation of the cholinergic system can attenuate experimental autoimmune encephalomyelitis (EAE). GAT107 is an allosteric agonist and positive allosteric modulator (ago-PAM) of α7 nAChR that can produce persistent activation of this receptor. Therefore, in the present study, we investigated the effect of GAT107 on neuroinflammation in EAE, the animal model used for the study of multiple sclerosis (MS) via α7 nAChR, and the inflammatory pathways involved. Methods EAE was induced by administration of myelin oligodendrocyte glycoprotein (MOG35–55) in C57BL/6 mice. EAE mice were treated with the ago-PAM GAT107 or a placebo for 9 days, starting from the day of EAE induction. Clinical assessment and immunological evaluation of immune cells and cytokine production was performed. Results Following activation of the α7 nAChR by GAT107 during EAE, disease severity was significantly reduced by 70% and was correlated with a reduction in the extent of neuroinflammation in the CNS. The treatment reduced encephalitogenic T cell proliferation and the production of pro-inflammatory cytokines, as well as increased the production of the anti-inflammatory cytokine IL-10. Furthermore, the expression of immune cell markers was altered by GAT107 treatment, which induced a significant reduction in macrophages, dendritic cells, and B cells, as well as a reduction in anti-MOG35–55 antibodies. Additionally, GAT107 was found to directly activate α7 nAChR in murine macrophage RAW264.7 cells and in human PBMCs derived from MS patients and healthy donors. Conclusions Our results show that GAT107 can be a useful molecule for harnessing the cholinergic anti-inflammatory pathway for long-lasting and wide-ranging modulation and downregulation of neuroinflammation in EAE.