Nicotine use is more prevalent in patients with psychiatric disorders, especially those diagnosed with psychotic illnesses. Previously, this higher prevalence has been partially attributed to the potential ameliorative effects of nicotine on symptom severity and cognitive impairment. Some healthcare professionals and patients perceive there is a beneficial effect of nicotine on mental health. Emerging data show that the harm associated with nicotine in the population of patients with mental health conditions outweighs any potential benefit. This paper will review the evidence surrounding the nicotinic system and schizophrenia, with a focus on any causality between nicotine and psychosis.