Cigarette craving contributes substantially to the maintenance of tobacco use disorder. Behavioral strategies to regulate craving may facilitate smoking cessation but remain underexplored. We adapted an emotion-regulation strategy, using proximal/distal self-positioning, to the context of cigarette craving to examine craving regulation in 42, daily smokers (18-25 years old). After overnight abstinence from smoking, before and after smoking their first cigarette of the day, participants viewed videos of natural scenes presenting young adults who were either smoking cigarettes ("smoke") or not ("non-smoke"). Before each video, participants were instructed to imagine themselves either immersed in the scene ("close") or distanced from it ("far"). They rated their craving after each video. Task-based fMRI data are presented for a subsample of participants (N = 21). We found main effects of smoking, instruction, and video type on craving-lower ratings after smoking than before, following the "far" vs. "close" instructions, and when viewing non-smoke vs. smoke videos. Before smoking, "smoke" vs. "non-smoke" videos elicited activation in, orbitofrontal cortex, anterior cingulate, lateral parietal cortex, mid-occipital cortex, ventral striatum, dorsal caudate, and midbrain. Smoking reduced activation in anterior cingulate, left inferior frontal gyrus, and bilateral temporal poles. Activation was reduced in the ventral striatum and medial prefrontal cortex after the "far" vs. the "close" instruction, suggesting less engagement with the stimuli during distancing. The results indicate that proximal/distal regulation strategies impact cue-elicited craving, potentially via downregulation of the ventral striatum and medial prefrontal cortex, and that smoking during abstinence may increase cognitive control capacity during craving regulation.