Despite their theoretical rationale, nicotinic alpha-7 acetylcholine (nα) receptor agonists, have largely failed to demonstrate efficacy in placebo-controlled trials in schizophrenia. AVL-3288 is a nα positive allosteric modulator (PAM), which is only active in the presence of the endogenous ligand (acetylcholine), and thus theoretically less likely to cause receptor desensitization. We evaluated the efficacy of AVL-3288 in a Phase 1b, randomized, double-blind, placebo-controlled, triple cross-over study. Twenty-four non-smoking, medicated, outpatients with schizophrenia or schizoaffective disorder and a Repeatable Battery for the Assessment of Neuropsychological Status (RBANS) ≥62 were randomized. Each subject received 5 days of AVL-3288 (10, 30 mg) and placebo across three separate treatment weeks. The primary outcome measure was the RBANS total scale score, with auditory P50 evoked potential suppression the key target engagement biomarker. Secondary outcome measures include task-based fMRI (RISE task), mismatch negativity, the Scale for the Assessment of Negative Symptoms of Schizophrenia (SANS) and the Brief Psychiatric Rating Scale (BPRS). Twenty-four subjects were randomized and treated without any clinically significant treatment emergent adverse effects. Baseline RBANS (82 ± 17) and BPRS (41 ± 13) scores were consistent with moderate impairment. Primary outcomes were negative, with non-significant worsening for both active groups vs. placebo in the P50 and minimal between group changes on the RBANS. In conclusion, the results did not indicate efficacy of the compound, consistent with most prior results for the nα target.