We identified regions within the N-terminal extracellular domain of alpha7 nicotinic acetylcholine receptors that affect channel gating. By single-channel analysis of alpha7 nicotinic acetylcholine receptors currents, we show that the difference in efficacy between the two agonists acetylcholine and 1,1-dimethyl-4-phenylpiperazinium (DMPP) is due to a slower channel activation rate by DMPP. The partial efficacy of DMPP was not caused by channel block or faster desensitization of alpha7 AChRs by DMPP. In addition, the efficacy and, by inference, the activation rate were found to be voltage dependent. Using chimeras of the two closely related subunits alpha7 and alpha8, we map residues that affect channel activation rate and agonist affinity to two different regions of the extracellular domain. Residues that affect channel activation rate are within the sequence 1-179, whereas residues that affect agonist affinity are within the sequence 180-208.