Tobacco use in developed countries is estimated to be the single largest cause of premature death. Nicotine is the primary component of tobacco that drives use, and like other addictive drugs, nicotine reinforces self-administration and place preference in animal studies. Midbrain dopamine neurons normally help to shape behaviour by reinforcing biologically rewarding events, but addictive drugs such as cocaine can inappropriately exert a reinforcing influence by acting upon the mesolimbic dopamine system. Here we show that the same concentration of nicotine achieved by smokers activates and desensitizes multiple nicotinic receptors thereby regulating the activity of mesolimbic dopamine neurons. Initial application of nicotine can increase the activity of the dopamine neurons, which could mediate the rewarding aspects of tobacco use. Prolonged exposure to even these low concentrations of nicotine, however, can cause desensitization of the nicotinic receptors, which helps to explain acute tolerance to nicotine's effects. The effects suggest a cellular basis for reports that the first cigarette of the day is the most pleasurable, whereas the effect of subsequent cigarettes may depend on the interplay between activation and desensitization of multiple nicotinic receptors.