Understanding nicotine's neurobiological and cognitive mechanisms may help explain both its addictive properties and potential therapeutic applications. As such, functional MRI was used to determine the neural substrates of nicotine's effects on a sustained attention (rapid visual information-processing) task. Performance was associated with activation in a fronto-parietal-thalamic network in both smokers and nonsmokers. Along with subtle behavioral deficits, mildly abstinent smokers showed less task-induced brain activation in the parietal cortex and caudate than did nonsmokers. Transdermal nicotine replacement improved task performance in smokers and increased task-induced brain activation in the parietal cortex, thalamus, and caudate, while nicotine induced a generalized increase in occipital cortex activity. These data suggest that nicotine improves attention in smokers by enhancing activation in areas traditionally associated with visual attention, arousal, and motor activation.