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Importance: Withdrawal from nicotine is an important contributor to smoking relapse. Understanding how reward-based decision making is affected by abstinence and by pharmacotherapies such as nicotine replacement therapy and varenicline tartrate may aid cessation treatment., Objective: To independently assess the effects of nicotine dependence and stimulation of the nicotinic acetylcholine receptor on the ability to interpret valence information (reward sensitivity) and subsequently alter behavior as reward contingencies change (cognitive flexibility) in a probabilistic reversal learning task., Design, Setting, and Participants: Nicotine-dependent smokers and nonsmokers completed a probabilistic reversal learning task during acquisition of functional magnetic resonance imaging (fMRI) in a 2-drug, double-blind placebo-controlled crossover design conducted from January 21, 2009, to September 29, 2011. Smokers were abstinent from cigarette smoking for 12 hours for all sessions. In a fully Latin square fashion, participants in both groups underwent MRI twice while receiving varenicline and twice while receiving a placebo pill, wearing either a nicotine or a placebo patch. Imaging analysis was performed from June 15, 2015, to August 10, 2016., Main Outcome and Measures: A well-established computational model captured effects of smoking status and administration of nicotine and varenicline on probabilistic reversal learning choice behavior. Neural effects of smoking status, nicotine, and varenicline were tested for on MRI contrasts that captured reward sensitivity and cognitive flexibility., Results: The study included 24 nicotine-dependent smokers (12 women and 12 men; mean [SD] age, 35.8 [9.9] years) and 20 nonsmokers (10 women and 10 men; mean [SD] age, 30.4 [7.2] years). Computational modeling indicated that abstinent smokers were biased toward response shifting and that their decisions were less sensitive to the available evidence, suggesting increased impulsivity during withdrawal. These behavioral impairments were mitigated with nicotine and varenicline. Similarly, decreased mesocorticolimbic activity associated with cognitive flexibility in abstinent smokers was restored to the level of nonsmokers following stimulation of nicotinic acetylcholine receptors (familywise error-corrected P < .05). Conversely, neural signatures of decreased reward sensitivity in smokers (vs nonsmokers; familywise error-corrected P < .05) in the dorsal striatum and anterior cingulate cortex were not mitigated by nicotine or varenicline., Conclusions and Relevance: There was a double dissociation between the effects of chronic nicotine dependence on neural representations of reward sensitivity and acute effects of stimulation of nicotinic acetylcholine receptors on behavioral and neural signatures of cognitive flexibility in smokers. These chronic and acute pharmacologic effects were observed in overlapping mesocorticolimbic regions, suggesting that available pharmacotherapies may alleviate deficits in the same circuitry for certain mental computations but not for others., Trial Registration: clinicaltrials.gov Identifier: NCT00830739.