Expectancies of nicotine content have been shown to impact smokers' subjective responses and smoking behaviors. However, little is known about the neural substrates modulated by verbally induced expectancies in smokers. In this study we used functional magnetic resonance imaging (fMRI) to investigate how verbally induced expectations, regarding the presence or absence of nicotine, modulated smokers' neural response to a nicotine-free odor. While laying in the scanner, all participants (N = 24) were given a nicotine-free odor, but whereas one group was correctly informed about the absence of nicotine (control group n = 12), the other group was led to believe that the presented odor contained nicotine (expectancy group n = 12). Smokers in the expectancy group had significantly increased blood-oxygen-level-dependent (BOLD) responses during the presentation of the nicotine-free odor in the left ventral tegmental area (VTA), and in the right insula, as compared to smokers in the control group (Regions of interest analysis with pFWE-corrected p <= 0.05). At a more liberal uncorrected statistical level (p-unc <= 0.001), increased bilateral reactivity in the dorsolateral prefrontal cortex (dlPFC) was also observed in the expectancy group as compared with the control group. Our findings suggest that nicotine-expectancies induced through verbal instructions can modulate nicotine relevant brain regions, without nicotine administration, and provide further neural support for the key role that cognitive expectancies play in the cause and treatment of nicotine dependence.