In a double-blind, placebo-controlled study, we examined the effects of nicotine (2 mg administered by inhalator) on the cognitive performance of male and female non-smoking students and on mood changes following a moderately stressful task. The groups were matched for age and IQ, and did not differ in pre-test measures of anxiety, depression, extroversion and neuroticism or in their weekly alcohol or daily caffeine intake. Nicotine did not change performance in tests of attention and memory. Exposure to moderate stress significantly increased ratings of anxiety, discontent and aggression and nicotine blocked these mood changes in females, but enhanced them in males. This suggests that young women may start regular smoking as a form of stress self-medication, which implies that preventative and smoking cessation programmes would be more successful in women if they addressed issues of stress and anxiety, which may be core factors underlying initiation and maintenance of regular smoking.