Electrophysiological studies show that nicotine enhances neural responses to characteristic frequency stimuli. Previous behavioral studies partially corroborate these findings in young adults, showing that nicotine selectively enhances auditory processing in difficult listening conditions. The present work extended previous work to include both young and older adults and assessed the nicotine effect on sound frequency and intensity discrimination. Hypotheses were that nicotine improves auditory performance and that the degree of improvement is inversely proportional to baseline performance. Young (19-23 years old) normal-hearing nonsmokers and elderly (61-80) nonsmokers with normal hearing between 500 and 2000 Hz received nicotine gum (6 mg) or placebo gum in a single-blind, randomized crossover design. Participants performed three experiments (frequency discrimination, frequency modulation identification, and intensity discrimination) before and after treatment. The perceptual differences were analyzed between pre- and post-treatment, as well as between post-treatment nicotine and placebo conditions as a function of pre-treatment baseline performance. Compared to pre-treatment performance, nicotine significantly improved frequency discrimination. Compared to placebo, nicotine significantly improved performance for intensity discrimination, and the improvement was more pronounced in the elderly with lower baseline performance. Nicotine had no effect on frequency modulation identification. Nicotine effects are task-dependent, reflecting possible interplays of subjects, tasks and neural mechanisms.