The behavioural and cognitive effects of nicotine in schizophrenia have received much interest in recent years. The rate of smoking in patients with schizophrenia is estimated to be two- to four-fold the rate seen in the general population. Furthermore such patients favour stronger cigarettes and may also extract more nicotine from their cigarettes than other smokers. The question has been raised whether the widespread smoking behaviour seen in this patient group is in fact a manifestation of a common underlying physiology, and that these patients smoke in an attempt to self-medicate. We present an overview of the explanations for elevated rates of smoking in schizophrenia, with particular emphasis on the theories relating this behaviour to sensory gating and cognitive deficits in this disorder that have been viewed as major support for the self-medication hypotheses.