The development of nicotine dependence is related to stimulation of the dopamine projections to the nucleus accumbens. This review considers the evidence that the addictive potential of nicotine depends upon its ability to elicit burst firing of these neurones and, thereby, evoke a large and sustained increase in the dopamine concentration in the extracellular space between the cells. This dopamine, it is argued, stimulates extra-synaptic dopamine receptors that mediate the responses underling the development of dependence. The review also considers the hypothesis that the two principal subdivisions of the structure, the core and shell, play different roles in the development of dependence. It proposes that the projections to the shell signal the presence of a rewarding stimulus and facilitate the acquisition of behaviours related to obtaining the reward. In contrast, the projections to the core, which are sensitised selectively by repeated exposure to the drug, mediate the transition to habit or Pavlovian responding to cues repetitively paired with the positive reinforcing properties of nicotine. Nicotine withdrawal, following a period of chronic exposure, diminishes the activity of the dopamine projections to the accumbal shell, a response that is thought to be the neural correlate of the anhedonia experienced by many abstinent smokers. The data suggest that plasticity within the principal mesoaccumbens dopamine projections play a central role in the development of nicotine dependence and that the mechanisms underlying the plasticity may provide putative targets for the treatment of tobacco dependence.