Addictive drugs induce a dopamine signal that contributes to the initiation of addiction, and the dopamine signal influences drug-associated memories that perpetuate drug use. The addiction process shares many commonalities with the synaptic plasticity mechanisms normally attributed to learning and memory. Environmental stimuli repeatedly linked to addictive drugs become learned associations, and those stimuli come to elicit memories or sensations that motivate continued drug use. Applying in vivo recording techniques to freely moving mice, we show that physiologically relevant concentrations of the addictive drug nicotine directly cause in vivo hippocampal synaptic potentiation of the kind that underlies learning and memory. The drug-induced long-term synaptic plasticity required a local hippocampal dopamine signal. Disrupting general dopamine signaling prevented the nicotine-induced synaptic plasticity and conditioned place preference. These results suggest that dopaminergic signaling serves as a functional label of salient events by enabling and scaling synaptic plasticity that underlies drug-induced associative memory.