Nicotine addiction remains a major health problem in the US and throughout the world. Nicotine has rewarding effects at relatively low doses and intensely aversive effects at higher doses. The projection from the medial habenula (MHb) to the interpeduncular nucleus (IPN) contributes to these aversive effects. This “aversive” pathway may influence the development and maintenance of nicotine dependence and also contributes to withdrawal effects. Thus, improved understanding of the mechanisms that underlie the aversive effects of nicotine may be important in developing more effective therapies for smoking cessation. Enhanced activity in the MHb-IPN enhances aversion to nicotine, while decreased activity in this pathway increases appetitive responding for nicotine doses that were previously aversive. Although these results implicate the MHb-IPN circuitry, the downstream post-synaptic targets of the IPN that mediates these effects remain largely uncharacterized. The aversive effects of nicotine may occur through an indirect suppression of the excitability and output of VTA dopamine (DA) neurons. Burst activity in DA neurons is important for reward-associated behaviors, and aversive experiences can suppress DA neuron activity. While the IPN projects to several brain areas, it strongly innervates the lateral dorsal tegmental nucleus (LDTg), a brainstem cholinergic center that controls burst firing of VTA DA neurons. Therefore, we hypothesized that IPN projections to LDTg are inhibitory. We expressed Channelrhodopsin (ChR2) in IPN neurons and stimulated the terminals with light while recording specifically from LDTg neurons that project to the VTA. We found that light-evoked synaptic inputs were blocked by the GABAA receptor antagonist bicuculline. Additionally, optogenetic stimulation of either the IPN directly, or the IPN terminals in the LDTg specifically, results in aversion. We are testing the modulation of these inhibitory inputs by high and low concentrations of nicotine, and preliminary evidence suggests that high concentrations of nicotine selectively enhance light-evoked GABAergic currents from the IPN onto LDTg neurons that project to the VTA. We have also found evidence that optogenetically inhibiting the IPN terminals in the LDTg not only reduces aversion to a high dose of nicotine, but actually shifts the aversion to reward. These findings highlight the importance of the IPN-LDTg connection in mediating the aversive effects of nicotine and provide further insights into the ways in which reward and aversive circuitries interact to produce an overall affective state.