To elucidate the neural correlates of cognitive effects of nicotine, we examined behavioral performance and blood oxygenation level-dependent regional brain activity, using functional magnetic resonance imaging, during a parametric "n-back" task in healthy nonsmoking males after the administration of nicotine (12 microg/kg body weight) or saline. Nicotine, compared to placebo, improved accuracy (P = 0.008) in all active conditions (2%-11%), and had a load-specific effect on latency (P = 0.004; 43.78% decrease at the highest memory load). Within a network of parietal and frontal areas activated by the task (P < 0.05, corrected at the voxel level), nicotine produced an increased response (P < 0.05; uncorrected within the regions of interest) in the anterior cingulate, superior frontal cortex, and superior parietal cortex. It also produced an increased response in the midbrain tectum in all active conditions and in the parahippocampal gyrus, cerebellum, and medial occipital lobe during rest (P = 0.05; uncorrected). The present observations point to altered neuronal activity in a distributed neural network associated with on-line task monitoring and attention and arousal systems as underlying nicotine-related enhancement of attention and working memory in human subjects.