Tobacco smoking is a preventable cause of morbidity and mortality throughout the world. Smoking comes in form of absorption of many compounds, among which nicotine is the main psychoactive component of tobacco and its positive and negative reinforcement effects are proposed to be the key mechanism for the initiation and maintenance of smoking. Growing evidence suggests that the cognitive enhancement effects of nicotine may also contribute to the difficulty of quitting smoking, especially in individuals with psychiatric disorders. In this review, we first introduce the beneficial effect of nicotine on cognition including attention, short-term memory and long-term memory. We next summarize the beneficial effect of nicotine on cognition under pathological conditions, including Alzheimer's disease, Parkinson's disease, Schizophrenia, Stress-induced Anxiety, Depression, and drug-induced memory impairment. The possible mechanism underlying nicotine's effect is also explored. Finally, nicotine's detrimental effect on cognition is discussed, including in the prenatal and adolescent periods, and high-dose nicotine- and withdrawal-induced memory impairment is emphasized. Therefore, nicotine serves as both a friend and foe. Nicotine-derived compounds could be a promising strategy to alleviate neurological disease-associated cognitive deficit, however, due to nicotine's detrimental effect, continued educational programs and public awareness campaigns are needed to reduce tobacco use among pregnant women and smoking should be quitted even if it is e-cigarette, especially for the adolescents.