Although a growing literature has demonstrated elevations in insomnia symptoms among persons with either panic disorder (PD) or posttraumatic stress disorder (PTSD) relative to people without psychopathology, comparably little is known about processes underlying these associations. In recognition of this important gap in the literature, this study tested nicotine dependence as a partial mediator of the relations between insomnia symptoms and both PD and PTSD among a nationally representative sample of 5,692 (3,311 females; Mage=43.33, SD=16.55) adults from the National Comorbidity Survey-Replication. Consistent with hypotheses, nicotine dependence partially mediated the relations between insomnia and both PD and PTSD after controlling for variance accounted for by diagnoses of major depressive episodes, drug and alcohol dependence, and gender. Overall, results suggest nicotine dependence may be a possible mechanism that underlies insomnia among those with PD and PTSD. Depression and Anxiety 0:1–10, 2007. Published 2007 Wiley-Liss, Inc.