The prevalence rate of smoking among schizophrenia patients is as high as 88 percent. This is associated with a 2-fold increase in deaths due to smoking related diseases-compounded by high rates of nicotine dependence and low abstinence rates following cessation programs. Converging lines of evidence suggest that high rates of smoking and nicotine addiction among schizophrenic patients is influenced by the presence of disease-related abnormalities in brain function. Genetic and post mortem studies show that patients exhibit abnormalities in neuronal nicotinic receptors, which are involved in a number of cognitive functions. Pharmacological studies show that nicotine temporally improves performance in several cognitive tasks including sensory gating, long-term memory, and visual tracking. These data support a growing consensus that smoking among schizophrenic patients is a form of self-medication, and suggest that the success of targeted smoking cessation programs will depend, in part, on finding alternative means of treating the underlying cognitive deficits. One of the most reproducible neurocognitive and biological changes in schizophrenia is abnormal visual tracking, or smooth pursuit eye movements. Preliminary data show that previously reported deficits in visual tracking are related to anticipatory learning deficits and that nicotine enhances performance in patients by temporarily treating this learning deficit. A better understanding of these processes may lead to better behavioral and/or pharmacological therapeutic interventions for excessive nicotine abuse and recidivism in this clinically vulnerable population. In order to identify brain regions underlying this learning deficit we propose to compare brain activations in 30 healthy controls and 30 patients with schizophrenia during anticipation of target motion using functional magnetic resonance imaging (fMRI). In order to identify the brain regions involved in nicotine-induced enhancement of anticipatory learning we will compare activation in patients under conditions of unexpected and anticipated target motion following administration of nicotine and placebo.