Nicotine and tonic dopamine (DA) levels [as inferred by catechol-O-methyl tranferase (COMT) Val158Met genotype] interact to affect prefrontal processing. Prefrontal cortical areas are involved in response to performance feedback, which is impaired in smokers. We investigated whether there is a nicotine × COMT genotype interaction in brain circuitry during performance feedback of a reward task. We scanned 23 healthy smokers (10 Val/Val homozygotes, 13 Met allele carriers) during two fMRI sessions while subjects were wearing a nicotine or placebo patch. A significant nicotine × COMT genotype interaction for BOLD signal during performance feedback in cortico-striatal areas was seen. Activation in these areas during the nicotine patch condition was greater in Val/Val homozygotes and reduced in Met allele carriers. During negative performance feedback, the change in activation in error detection areas such as anterior cingulate cortex (ACC)/superior frontal gyrus on nicotine compared to placebo was greater in Val/Val homozygotes compared to Met allele carriers. With transdermal nicotine administration, Val/Val homozygotes showed greater activation with performance feedback in the dorsal striatum, area associated with habitual responding. In response to negative feedback, Val/Val homozygotes had greater activation in error detection areas, including the ACC, suggesting increased sensitivity to loss with nicotine exposure. Although these results are preliminary due to small sample size, they suggest a possible neurobiological mechanism underlying the clinical observation that Val/Val homozygotes, presumably with elevated COMT activity compared to Met allele carriers and therefore reduced prefrontal DA levels, have poorer outcomes with nicotine replacement therapy.