Nearly 90% of schizophrenics smoke cigarettes, considerably higher than the general population's rate of 25%. There is some indication that schizophrenics may smoke as a form of self-medication. Nicotine has a variety of pharmacologic effects that may both counteract some of the cognitive deficits of schizophrenia and counteract some of the adverse side effects of antipsychotic drugs. In the current study, we assessed the interactions of haloperidol and nicotine on cognitive performance of a group of schizophrenics. These patients were in a double-blind study, randomly assigning them to low, moderate, and high dose levels of haloperidol. The subjects, all smokers, came to the laboratory on four different mornings after overnight deprivation from cigarettes. In a double-blind fashion, they were administered placebo, low (7 mg/day), medium (14 mg/day), or high (21 mg/day) dose nicotine skin patches. Three hours after administration of the skin patch, the subjects were given a computerized cognitive test battery including: simple reaction time, complex reaction time (spatial rotation), delayed matching to sample, the Sternberg memory test, and the Conners continuous performance test (CPT). With the placebo nicotine patch, there was a haloperidol dose-related impairment in delayed matching to sample choice accuracy and an increase in response time on the complex reaction time task. Nicotine caused a dose-related reversal of the haloperidol-induced impairments in memory performance and complex reaction time. In the CPT, nicotine reduced the variability in response that is associated with attentional deficit. These results demonstrate the effects of nicotine in reversing some of the adverse side effects of haloperidol and improving cognitive performance in schizophrenia.