Nicotine exposure during adolescence has emerged as a significant risk factor for later psychiatric disease. Notably, adolescence is a critical period for the maturation of acetylcholine and dopamine systems, neuromodulators which tightly regulate cognitive, motivational and emotional behaviors known to contribute to psychiatric vulnerability. This review explores whether long-lasting modifications in these neuromodulatory systems following adolescent nicotine exposure underlie the increased vulnerability to mental health disorders. We discuss evidence that nicotine in adolescence leads to enduring molecular, cellular alterations by perturbing the normal trajectory of cholinergic and dopamine systems, and link these changes with potential adverse behavioral outcomes in adulthood. We propose that persistent alterations in acetylcholine and dopamine signaling caused by adolescent nicotine exposure may contribute to the heightened risk for psychiatric disorders including substance abuse, anxio-depressive disorders, and schizophrenia for which deficits in a large spectrum of motivational domains are highly prevalent. The interaction between nicotine and these developing neurotransmitter systems during adolescence raises important questions about the mechanisms driving these changes. Finally, we discuss limitations in the current research and subsequently identify open questions in the field which will help drive forward research on the psychiatric consequences of adolescent nicotine use. Understanding these maladaptations could pave the way for targeted therapeutic strategies to mitigate the adverse effects of adolescent nicotine exposure on brain development and subsequent psychiatric outcomes.