Context: Patients with schizophrenia have a high rate of cigarette smoking and also exhibit profound deficits in sensory processing, which may in part be ameliorated by the acute actions of smoke-inhaled nicotine. The mismatch negativity (MMN), a preattentive event-related potential index of auditory sensory memory, is diminished in schizophrenia. The MMN is increased in healthy controls with acute nicotine. Objective: To utilize the MMN to compare auditory sensory memory in minimally tobacco-deprived (3 hours) patients and matched tobacco-deprived smoking controls and to assess the effects of acute nicotine on MMN-indexed sensory memory processing in the patients. Design: Event-related potentials were recorded in 2 auditory oddball paradigms, one involving tone frequency changes (frequency MMN) and one involving tone duration changes (duration MMN). Controls were assessed once under nontreatment conditions, and patients were assessed twice under randomized double-blind treatment conditions involving placebo and nicotine (8 mg) gum. Setting: Outpatient mental health center. Patients: Twelve smokers with schizophrenia and twelve control smokers. Results: Compared with the controls, the patients showed reduced frequency-MMN (P < 0.001) and duration-MMN (P < 0.04) amplitudes. In addition to prolonging peak latency in duration MMN (P < 0.01), nicotine, relative to placebo, increased the amplitude of the patients' duration MMN (P G 0.01), but not their frequency MMN, to a level comparable with that seen in the controls. Conclusions: These preliminary findings demonstrate for the first time that acute nicotine can normalize temporal aspects of sensory memory processing in patients with schizophrenia, an effect that may be mediated by activation of alpha 7 nicotinic acetylcholine receptors, the function of which is diminished in schizophrenia. These ameliorating actions of nicotine may have implications for understanding the close relationship between tobacco smoking and schizophrenia and for developing nicotinic pharmacotherapies to alleviate sensory memory impairments in schizophrenia.