Adolescence is a period in which the developing prefrontal cortex (PFC) is sensitive to maladaptive changes when exposed to nicotine. Nicotine affects PFC function and repeated exposure to nicotine during adolescence impairs attention performance and impulse control during adulthood. Nicotine concentrations experienced by smokers are known to desensitize nicotinic acetylcholine receptors (nAChRs), but the impact thereof on PFC circuits is poorly understood. Here, we investigated how smoking concentrations of nicotine (100-300 nm) interfere with cholinergic signaling in the mouse PFC. nAChR desensitization depends on subunit composition. Since nAChR subunits are differentially expressed across layers of the PFC neuronal network, we hypothesized that cholinergic signaling through nAChRs across layers would suffer differentially from exposure to nicotine. Throughout the PFC, nicotine strongly desensitized responses to ACh in neurons expressing β2* nAChRs, whereas ACh responses mediated by α7 nAChRs were not hampered. The amount of desensitization of β2* nAChR currents depended on neuron type and cortical layer. β2*-mediated responses of interneurons in LII-III and LVI completely desensitized, while cholinergic responses in LV interneurons and LVI pyramidal cells showed less desensitization. This discrepancy depended on α5 subunit expression. Two-photon imaging of neuronal population activity showed that prolonged exposure to nicotine limited cholinergic signaling through β2* nAChRs to deep PFC layers where α5 subunits were expressed. Together, our results demonstrate a layer-dependent decrease in cholinergic activation of the PFC through nAChRs by nicotine. These mechanisms may be one of the first steps leading up to the pathophysiological changes associated with nicotine exposure during adolescence.