The effects of nicotine on dopamine transmission from mesostriatal dopamine neurons are central to its reinforcing properties. Only recently however, has the influence of presynaptic nicotinic receptors (nAChRs) on dopaminergic axon terminals within striatum begun to be understood. Here, rather than simply enhancing (or inhibiting) dopamine release, nAChRs perform the role of a presynaptic filter, whose influence on dopamine release probability depends on presynaptic activity in dopaminergic as well as cholinergic neurons. Both mesostriatal dopaminergic neurons and striatal cholinergic interneurons play key roles in motivational and sensorimotor processing by the basal ganglia. Moreover, it appears that the striatal influence of dopamine and ACh cannot be fully appreciated without an understanding of their reciprocal interactions. We will review the powerful filtering by nAChRs of striatal dopamine release and discuss its dependence on activity in dopaminergic and cholinergic neurons. We will also review how nicotine, acting via nAChR desensitization, promotes the sensitivity of dopamine synapses to activity. This filtering action might provide a mechanism through which nicotine promotes how burst activity in dopamine neurons facilitates goal-directed behaviour and reinforcement processing. More generally, it indicates that we should not restrict our view of presynaptic nAChRs to simply enhancing neurotransmitter release. We will also summarize current understanding of the forms and functions of the diverse nAChRs purported to exist on dopaminergic axons. A greater understanding of nAChR form and function is imperative to guide the design of ligands with subtype-selective efficacy for improved therapeutic interventions in nicotine addiction as well as Parkinson's disease.