Several bacterial species are adapted to nicotine, the main alkaloid produced by the tobacco plant, as growth substrate. A general outline of nicotine catabolism by these bacteria is presented, followed by an emphasis on new insights based on molecular biology and biochemical work obtained with the catabolic plasmid pAO1 of Arthrobacter nicotinovorans. Its 165-kb sequence revealed the genetic structure of nicotine catabolism and allowed the assignment of new enzyme activities to specific gene products, which extends the known biochemical steps of this pathway. Potential implications of the progress in our understanding of bacterial breakdown of nicotine for biotechnological applications are discussed.