Galantamine is an approved treatment for mild to moderate Alzheimer's disease, with demonstrated benefits for cognition and functional ability in human studies. The mechanism of action that is most generally recognized as underlying the clinical benefits of galantamine is inhibition of brain acetylcholinesterase (AChE). However, an increasing body of evidence suggests that an additional mechanism, most likely allosteric modulation of nicotinic acetylcholine receptors (nAChRs), may contribute to the therapeutic effects of galantamine. This review summarizes the research on this additional mechanism, with emphasis on data derived from in vivo animal studies and open-label hypothesis-generating studies in humans. In general, these studies provide evidence of effects beyond those of AChE inhibition alone, most notably in comparisons with other AChE inhibitors, in which galantamine produced similar or greater effects at doses that provided lower levels of brain AChE inhibition. The use of nAChR agonists and antagonists in some of these studies lends support to the proposed allosteric potentiating ligand activity of galantamine at nAChRs. This dual action of galantamine may account for its therapeutic profile.