Identifying the neurological mechanisms underlying nicotine reinforcement is a healthcare imperative, if society is to effectively combat tobacco addiction. The majority of studies of the neurobiology of addiction have focused on dopamine (DA)-containing neurons of the ventral tegmental area (VTA). However, recent data suggest that neurons of the laterodorsal tegmental (LDT) nucleus, which sends cholinergic, GABAergic, and glutamatergic-containing projections to DA-containing neurons of the VTA, are critical to gating normal functioning of this nucleus. The actions of nicotine on LDT neurons are unknown. We addressed this issue by examining the effects of nicotine on identified cholinergic and non-cholinergic LDT neurons using whole-cell patch clamp and Ca(2+)-imaging methods in brain slices from mice (P12-P45). Nicotine applied by puffer pipette or bath superfusion elicited membrane depolarization that often induced firing and TTX-resistant inward currents. Nicotine also enhanced sensitivity to injected current; and, baseline changes in intracellular calcium were elicited in the dendrites of some cholinergic LDT cells. In addition, activity-dependent calcium transients were increased, suggesting that nicotine exposure sufficient to induce firing may lead to enhancement of levels of intracellular calcium. Nicotine also had strong actions on glutamate and GABA-releasing presynaptic terminals, as it greatly increased the frequency of miniature EPSCs and IPSCs to both cholinergic and non-cholinergic neurons. Utilization of nicotinic acetylcholine receptors (nAChR) subunit antagonists revealed that presynaptic, inhibitory terminals on cholinergic neurons were activated by receptors containing alpha 7, beta2, and non-alpha 7 subunits, whereas, presynaptic glutamatergic terminals were activated by nAChRs that comprised non-alpha 7 subunits. We also found that direct nicotinic actions on cholinergic LDT neurons were mediated by receptors containing alpha 7, beta2, and non-alpha 7 subunits. These findings led us to suggest that nicotine exposure from smoking will enhance both the excitability and synaptic modulation of cholinergic and non-cholinergic LDT neurons, and increase their signature neurotransmitter outflow to target regions, including the VTA. This may reinforce the direct actions of this drug within reward circuitry and contribute to encoding stimulus saliency.