Tobacco use is a major health problem that is estimated to cause 4 million deaths a year worldwide. Nicotine is the main addictive component of tobacco. It acts as an agonist to activate and desensitize nicotinic acetylcholine receptors (nAChRs). A component of nicotine's addictive power is attributable to actions on the mesolimbic dopaminergic system, which serves a fundamental role in the acquisition of behaviors that are inappropriately reinforced by addictive drugs. Here we show that nicotine, in the same concentration and time ranges as obtained from tobacco, has three main actions that regulate the activity of midbrain dopamine (DA) neurons. Nicotine first activates and then desensitizes nAChRs on the DA neurons. This process directly excites the DA neurons for a short period of time before the nAChRs desensitize. Nicotine also enhances glutamatergic excitation and decreases GABAergic inhibition onto DA neurons. These events increase the probability for synaptic plasticity, such as long-term potentiation. The short-lived direct excitation of the DA neurons coupled with the enhanced glutamatergic afferent activity provides the presynaptic and postsynaptic coincidence necessary to initiate synaptic potentiation. In total, these synaptic events lead to a relatively long-lasting heightened activity of midbrain DA neurons. Consistent with other summarized studies, this work indicates that the synaptic changes normally associated with learning and memory can be influenced and commandeered during the nicotine addiction process. (Contains 10 figures.)