Recently, the smoking cessation therapeutic varenicline, a nicotinic acetylcholine receptor (nAChR) partial agonist, has been shown to reduce alcohol consumption. However, the mechanism and nAChR subtype(s) involved are unknown. Here we demonstrate that varenicline and alcohol exposure, either alone or in combination, selectively activates dopaminergic (DAergic) neurons within the posterior, but not the anterior, ventral tegmental area (VTA). To gain insight into which nAChR subtypes may be involved in the response to alcohol, we analyzed nAChR subunit gene expression in posterior VTA DAergic neurons. Ethanol-activated DAergic neurons expressed higher levels of alpha4, alpha6, and beta3 subunit genes compared with nonactivated neurons. To examine the role of nicotinic receptors containing the alpha4 subunit (alpha4* nAChRs) in varenicline-induced reduction of alcohol consumption, we examined the effect of the drug in two complementary mouse models, a knock-out line that does not express the alpha4 subunit (alpha4 KO) and another line that expresses alpha4* nAChRs hypersensitive to agonist (Leu9\u27Ala). While varenicline (0.1-0.3 mg/kg, i.p.) reduced 2% and 20% alcohol consumption in wild-type (WT) mice, the drug did not significantly reduce consumption in alpha4 KO animals. Conversely, low doses of varenicline (0.0125-0.05 mg/kg, i.p.) that had little effect in WT mice dramatically reduced ethanol intake in Leu9\u27Ala mice. Infusion of varenicline into the posterior, but not the anterior VTA was sufficient to reduce alcohol consumption. Together, our data indicate that activation of alpha4* nAChRs is necessary and sufficient for varenicline reduction of alcohol consumption