Smoking prevalence is highly elevated in schizophrenia compared to the general population and to other psychiatric populations. Evidence suggests that smoking may lead to improvements of schizophrenia-associated attention deficits; however, large-scale studies on this important issue are scarce. We examined whether sustained, selective, and executive attention processes are differentially modulated by long-term nicotine consumption in 104 schizophrenia patients and 104 carefully matched healthy controls. A significant interaction of ‘smoking status’ × ‘diagnostic group’ was obtained for the domain of selective attention. Smoking was significantly associated with a detrimental conflict effect in controls, while the opposite effect was revealed for schizophrenia patients. Likewise, a positive correlation between a cumulative measure of nicotine consumption and conflict effect in controls and a negative correlation in patients were found. These results provide evidence for specific directional effects of smoking on conflict processing that critically dissociate with diagnosis. The data supports the self-medication hypothesis of smoking in schizophrenia and suggests selective attention as a specific cognitive domain targeted by nicotine consumption. A potential mechanistic model explaining these findings is discussed.