The enormous personal and societal costs associated with tobacco are well documented. Unlike the large literature on the prevalence and consequences of tobacco use, there are fewer data on the genetic epidemiology (family, adoption, and twin studies) of tobacco use initiation and nicotine dependence. This review is limited to smoking as this has been the overwhelming focus of the literature. The data from family, adoption, and twin studies strongly support a substantial genetic influence on the initiation and maintenance of smoking. The literature supports the following hypothesis of the development of nicotine dependence. Smoking initiation is the obligatory first step. Liability to initiating smoking results from genetic influences (60%) and from environmental influences shared by members of a twin pair (∼20%) and that are specific to an individual (∼20%). The impact of shared environment may be particularly pronounced in mid-adolescence when many begin smoking. A subset of those who initiate smoking progress to nicotine dependence: genetic factors appear to be more prominent in this transition (∼70%) and shared environmental influences appear to be negligible. The genetic factors that predispose to smoking initiation appear to overlap substantially but not completely with those for nicotine dependence. The substantial impact of genetic factors on smoking behavior has engendered molecular genetic studies of this complex trait. We need to localize and identify the specific genes involved—which genes predispose to smoking initiation and which to nicotine dependence? If such genes are located, by what biological mechanisms do they operate? Do these genes act directly by altering or enhancing the pharmacokinetics or pharmacodynamics of nicotine? Do they act indirectly via personality or depression? Are these genes specific to nicotine or are they also involved in dependence on other licit and illicit psychoactive substances? Are there different mechanisms in men and women? What are the specific environmental factors and how do genes and environment interact?