Tobacco and alcohol are the most commonly abused drugs worldwide. Many people smoke and drink together, but the mechanisms of this nicotine (NIC) -ethanol (EtOH) dependence are not fully known. EtOH has been shown to affect some nicotinic acetylcholine receptors (nAChRs), which potentially underlies NIC-EtOH codependence. Ventral Tegmental Area (VTA) dopamine (DA) and γ-aminobutyric acid (GABA) neurons express different nAChR subtypes, whose net activation results in enhancement of DA release in the Prefrontal Cortex (PFC) and Nucleus Accumbens (NAc). Enhancement of DA transmission in this mesocorticolimbic system is thought to lead to rewarding properties of EtOH and NIC, clarification of which is relevant to public health and clinical diseases. The aim of this study was to elucidate pharmacological mechanisms of action employed by both NIC and EtOH through nAChRs in VTA neurons by evaluating behavioral, network, synaptic and receptor functions therein. It was hypothesized that VTA GABA neurons are controlled by α7 nAChRs on presynaptic GLUergic terminals and α6 nAChRs on presynaptic GABAergic terminals. NIC and EtOH, via these nAChRs, modulate VTA GABA neuronal function. This modulation may underlie NIC and EtOH reward and reinforcement, while pharmacological manipulation of these nAChRs may be a therapeutic strategy to treat NIC or EtOH dependence. This data demonstrates that in VTA GABA neurons, α7 nAChRs on GLUergic terminals play a key role in the mediation of local NIC-induced firing increase. α6*-nAChRs on GABA terminals enhances presynaptic GABA release, and leads to greater inhibition to VTA GABA neurons, which results in an increase VTA DA neuron firing via a disinhibition mechanism. Genetic knockout of these nAChRs significantly prevents EtOH-induced animal conditioned place preference (CPP). Furthermore, levo-tetrahydropalmadine (l-THP), a compound purified from natural Chinese herbs, blocks nAChRs, prevents NIC-induced DA neuronal firing, and eliminates NIC CPP, suggesting it as a promising candidate in a new generation of interventions for smoking cessation. Improved understanding of underlying mechanisms and development of new drugs will increase the number of successful quitters each year and dramatically improve the quality of life for millions suffering from addiction, as well as those around them.