Children of women who smoke cigarettes during pregnancy display cognitive deficits in the auditory–verbal domain. Clinical studies have implicated developmental exposure to nicotine, the main psychoactive ingredient of tobacco, as a probable cause of subsequent auditory deficits. To test for a causal link, we have developed an animal model to determine how neonatal nicotine exposure affects adult auditory function. In adult control rats, nicotine administered systemically (0.7 mg/kg, s.c.) enhanced the sensitivity to sound of neural responses recorded in primary auditory cortex. The effect was strongest in cortical layers 3 and 4, where there is a dense concentration of nicotinic acetylcholine receptors (nAChRs) that has been hypothesized to regulate thalamocortical inputs. In support of the hypothesis, microinjection into layer 4 of the nonspecific nAChR antagonist mecamylamine (10 μM) strongly reduced sound-evoked responses. In contrast to the effects of acute nicotine and mecamylamine in adult control animals, neither drug was as effective in adult animals that had been treated with 5 days of chronic nicotine exposure (CNE) shortly after birth. Neonatal CNE also impaired performance on an auditory-cued active avoidance task, while having little effect on basic auditory or motor functions. Thus, neonatal CNE impairs nicotinic regulation of cortical function, and auditory learning, in the adult. Our results provide evidence that developmental nicotine exposure is responsible for auditory–cognitive deficits in the offspring of women who smoke during pregnancy, and suggest a potential underlying mechanism, namely diminished function of cortical nAChRs.