Nicotinic ACh receptors (nAChRs) have been implicated in a variety of brain functions, including neuronal development, learning and memory formation, and reward. Although there are substantial data indicating that nAChR subunits are found in many brain regions, the precise cellular roles of these subunits in neuronal functions have remained elusive. Until recently, nAChRs were thought primarily to serve a modulatory role in the brain by regulating neurotransmitter release from nerve terminals. However, new evidence has revealed that nAChRs also function in a postsynaptic role by mediating fast ACh-mediated synaptic transmission in the hippocampus and in the sensory cortex, and are found at somatodendritic as well as nerve terminal sites in the reward system. It is possible that presynaptic and postsynaptic nAChRs mediate changes in the efficacy of synaptic transmission in these brain regions. These changes could underlie the proposed functions of nAChRs in cognitive functions of the hippocampus and cerebral cortex, in neuronal development in the sensory cortex, and in reward.