Using Icelandic whole-genome sequence data and an imputation approach we searched for rare sequence variants in CHRNA4 and tested them for association with nicotine dependence. We show that carriers of a rare missense variant (allele frequency=0.24%) within CHRNA4, encoding an R336C substitution, have greater risk of nicotine addiction than non-carriers as assessed by the Fagerstrom Test for Nicotine Dependence (P=1.2 × 10−4). The variant also confers risk of several serious smoking-related diseases previously shown to be associated with the D398N substitution in CHRNA5. We observed odds ratios (ORs) of 1.7–2.3 for lung cancer (LC; P=4.0 × 10−4), chronic obstructive pulmonary disease (COPD; P=9.3 × 10−4), peripheral artery disease (PAD; P=0.090) and abdominal aortic aneurysms (AAAs; P=0.12), and the variant associates strongly with the early-onset forms of LC (OR=4.49, P=2.2 × 10−4), COPD (OR=3.22, P=2.9 × 10−4), PAD (OR=3.47, P=9.2 × 10−3) and AAA (OR=6.44, P=6.3 × 10−3). Joint analysis of the four smoking-related diseases reveals significant association (P=6.8 × 10−5), particularly for early-onset cases (P=2.1 × 10−7). Our results are in agreement with functional studies showing that the human α4β2 isoform of the channel containing R336C has less sensitivity for its agonists than the wild-type form following nicotine incubation.