Maternal smoking during pregnancy is associated with several adverse developmental outcomes in the offspring. These include preterm delivery, spontaneous abortion, growth restriction, increased risk of sudden infant death syndrome (SIDS), as well as long-term behavioral and psychiatric disorders. However, the underlying physiological mechanisms for these ill-effects are not fully understood. The aim of this paper is to review the animal and human data to date, linking in utero smoke exposure to negative neurodevelopmental outcomes. It is known that nicotine from cigarette smoke exerts its effects by affecting placental vasculature, and also by nicotinic acetylcholine receptor binding in fetal membranes. Thus, subsequent consequences involve a cascade of events causing not only dysregulation of the nicotinic and muscarinic, but also catecholaminergic and serotonergic neurotransmitter systems. These observations provide some insight into how smoking can impair neurodevelopment, but the long-term neurotransmitter involvement in dysregulation of emotion and attention awaits further elucidation. It is important that pregnant women are warned of the detrimental effects of smoking, and encouraged to abstain for healthy fetal development.