The addiction-relevant molecular, cellular, and behavioral actions of nicotine are derived from its stimulatory effects on neuronal nicotinic acetylcholine receptors (nAChRs) in the central nervous system. nAChRs expressed by dopamine-containing neurons in the ventral midbrain, most notably in the ventral tegmental area (VTA), contribute to the reward-enhancing properties of nicotine that motivate the use of tobacco products. nAChRs are also expressed by neurons in brain circuits that regulate aversion. In particular, nAChRs expressed by neurons in the medial habenula (mHb) and the interpeduncular nucleus (IPn) to which the mHb almost exclusively projects regulate the "set-point" for nicotine aversion and control nicotine intake. Different nAChR subtypes are expressed in brain reward and aversion circuits and nicotine intake is titrated to maximally engage reward-enhancing nAChRs while minimizing the recruitment of aversion-promoting nAChRs. With repeated exposure to nicotine, reward- and aversion-related nAChRs and the brain circuits in which they are expressed undergo adaptations that influence whether tobacco use will transition from occasional to habitual. Genetic variation that influences the sensitivity of addiction-relevant brain circuits to the actions of nicotine also influence the propensity to develop habitual tobacco use. Here, we review some of the key advances in our understanding of the mechanisms by which nicotine acts on brain reward and aversion circuits and the adaptations that occur in these circuits that may drive addiction to nicotine-containing tobacco products.