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Nicotine exposure during pregnancy leads to placental insufficiency impairing both fetal and neonatal development. Previous studies from our laboratory have demonstrated that in rats,nicotine augmented endoplasmic reticulum (ER) stress in association with placental insufficiency, however, the underlying mechanisms remain elusive. Therefore, we sought to investigate the possible direct effect of nicotine on ER stress in Rcho-1 rat placental trophoblastgiant (TG) cells during differentiation. Protein and/or mRNA expression of markers involved in ER stress (e.g., phosphorylated PERK, eIF2α, CHOP, BiP/GRP78) and trophoblast giant cell differentiation and function (e.g., Pl-1, Pgf, Hsd11b1, and Hsd11b2) were quantified via Western blot or Real-Time PCR. Nicotine treatment led to dose-dependent increases in the phosphorylation of PERK[Thr981] and eIF2α[Ser51], whereas pre-treatment with a nicotinic acetylcholine receptor (nAChR) antagonist (mecamylamine hydrochloride) blocked the induction of PERK phosphorylation, verifying the direct involvement of nicotine and nAChR binding. We next investigated select target genes known to play essential roles in placental TG cell differentiation and function (Pl-1, Pgf, Hsd11b1, and Hsd11b2), and found that nicotine significantly augmented the mRNA levels of Hsd11b1 in a dose-dependent manner. Furthermore, using Tauroursodeoxycholic acid (TUDCA), a safe bile acid known to improve protein chaperoning and folding, we were able to prevent nicotine-induced increases in both PERK phosphorylation and Hsd11b1 mRNA levels, revealing a potential novel therapeutic approach to reverse the deleterious effects of nicotine exposure in pregnancy. Collectively, these results implicate that nicotine, acting through its receptor, can directly augment ER stress and impair placental function.