Tobacco smoke exposure during development can result in lasting alterations in sensory processing and attention. This suggests that some constituent of smoke, such as the primary addictive component, nicotine, alters neurodevelopment. Although many effects of developmental nicotine exposure have been identified in humans and animal models, very few mechanistic studies have identified the molecular and anatomical basis for a defined behavioral consequence of developmental exposure. We show in this study that a mouse model of developmental nicotine exposure results in hypersensitive passive avoidance in adulthood. We have used transgenic mice in which β2 subunit containing nicotinic acetylcholine receptors (β2* nAChRs) are expressed exclusively on corticothalamic neurons (β2 tr(CT) mice) to identify the receptor subtypes involved and also to define the circuit level site of action responsible for this persistent, nicotine-induced behavioral phenotype. Further characterization of the native nAChRs expressed in this circuit indicates that both (α4)(2)(β2)(3) and (α4)(2)(β2)(2)α5 nAChR subtypes are present in corticothalamic projections. Consistent with a role for (α4)(2)(β2)(2)α5 nAChRs in mediating the effect of developmental nicotine exposure on adult passive avoidance behavior, constitutive deletion of the α5 nAChR subunit also alters this behavior. A critical period for this developmental consequence of nicotine exposure was defined by limiting exposure to the early post-natal period. Taken together, these studies identify a novel consequence of developmental nicotine exposure in the mouse, define the nAChR subtypes and neural circuit involved in this behavioral change and delimit the neurodevelopmental period critical for vulnerability to a behavioral alteration that persists into adulthood.