Chronic intake of nicotine can impair hippocampal plasticity, but the underlying mechanism is poorly understood. Here, we demonstrate that chronic nicotine administration in adult rats inactivates the cyclic AMP-response element binding protein (CREB), a transcription factor that regulates neurogenesis and other plasticity-related processes necessary for learning and memory. Consequently, we showed that impaired CREB signaling is associated with a significant decline in the production of new neurons in the dentate gyrus. Combining retrovirus labeling with gene expression approaches, we found that chronic nicotine administration reduces the number of adult-generated granule neurons by decreasing the survival of newborn cells but not the proliferation of progenitor cells. Additionally, we found that retroviral-mediated expression of a constitutively active CREB in the dentate gyrus rescues survival of newborn cells and reverses the nicotine-induced decline in the number of mature granule neurons. Prolonged nicotine exposure also compromises CREB activation and reduces the viability of progenitor cells in vitro, thereby suggesting that nicotine may exert its adverse effects directly on immature cells in vivo. Taken together, these data demonstrate that inhibition of CREB activation is responsible for the nicotine-induced impairment of hippocampal plasticity.