Numerous studies have indicated a correlation between ethanol intake and cigarette smoking in heavy drinkers. We have studied the underlying pharmacological basis of this relationship using cultured rat cortical neurons. These neurons express nicotinic receptors having characteristics similar to those described for the alpha4beta2 subunit combination. In the presence of alpha-bungarotoxin both acetylcholine (ACh) and nicotine evoked currents with respective EC50 values of 4.3 and 3.4 microM. The maximal nicotine-activated response, however, was only 56% that of the maximal ACh current. It was previously shown that 10 to 100 mM of ethanol potentiated ACh-mediated currents in these neurons. We demonstrate that 100 mM ethanol similarly potentiates currents evoked by 300 nM (40%) and 1 microM nicotine 61%). This suggests that an ethanol-induced potentiation of nicotinic currents may enhance the acute positive reinforcement associated with nicotine and could increase tobacco use during heavy ethanol intake. However, further experimentation indicated that the continuous perfusion of 30, 100, or 300 nM nicotine desensitizes ACh-evoked currents by 38, 54, and 62%, respectively, with little direct receptor-channel activation. The residual ACh currents of nicotine-desensitized receptor channels were potentiated by 100 mM ethanol to nearly the extent as were the undesensitized control responses. We propose that the opposing effect of ethanol on nicotine-induced desensitization could also explain the increased tobacco use observed with excessive drinking. Thus, ethanol has a dual effect regarding nicotine. It enhances acute nicotine-mediated receptor activation, although opposing the net effect of nicotine-induced receptor channel desensitization.