The alkaloid nicotine, a major addictive component of tobacco, exerts anti-inflammatory and immunemodulating activities on multiple cell types, such as T cells, B cells, dendritic cells, mononuclear phagocytes and polymorphonuclear leukocytes, in lung, spleen, liver, kidney and gastrointestinal tract. In addition, nicotine may blunt pro-inflammatory cytokine release, with prominent effects on T helper type 1 (Th1) and Th17 cytokines. The nonneuronal α7-nicotinic cholinergic receptors are a primary target for nicotine through the JAK2 and STAT3/NF-κB pathways, ultimately mediating the inhibition of pro-inflammatory gene transcription. The present paper reviews the growing evidence in favor of detrimental as well as beneficial effects of nicotine and other α7-nicotininc receptor agonists in pre-clinical models of organ-specific and systemic inflammatory and autoimmune diseases. These data may portend favorable implications for the targeted treatment of chronic and debilitating human disorders, such as diabetes, arthritis, asthma and inflammatory bowel disease, with α7-selective ligands.