The α7 nicotinic acetylcholine receptor has been extensively researched as a target for treatment of cognitive impairment in Alzheimer's disease and schizophrenia. Investigation of the α7 receptor is commonly performed in animals but it is critical to increase the biologically relevance of the model systems to fully capture the physiological role of the α7 receptor in humans. For example most humans, in contrast to animals, express the hybrid gene CHRFAM7A, the product of which modulates α7 receptor activity. In the present study, we used human induced pluripotent stem cell (hiPSC) derived neurons to establish a humanized α7 model. We established a cryobank of neural stem cells (NSCs) that could reproducibly be matured into neurons expressing neuronal markers and CHRNA7 and CHRFAM7A. The neurons responded to NMDA, GABA, and acetylcholine and exhibited synchronized spontaneous calcium oscillations. Gene expression studies and application of a range of α7 positive allosteric modulators (PNU-120595, TQS, JNJ-39393406 and AF58801) together with the α7 agonist PNU-282987 during measurement of intracellular calcium levels demonstrated the presence of functional α7 receptors in matured hiPSC-derived neuronal cultures. Pharmacological α7 activation also resulted in intracellular signaling as measured by ERK 1/2 phosphorylation and c-Fos protein expression. Moreover, PNU-120596 increased the frequency of the spontaneous calcium oscillations demonstrating implication of α7 receptors in human synaptic networks activity. Overall, we show that hiPSC derived neurons are an advanced in vitro model for studying human α7 receptor pharmacology and the involvement of this receptor in cellular processes as intracellular signaling and synaptic transmission.