Increased anxiety is a prominent withdrawal symptom in abstinent smokers, yet the neuroanatomical and molecular bases underlying it are unclear. Here we show that withdrawal-induced anxiety increases activity of neurons in the interpeduncular intermediate (IPI), a subregion of the interpeduncular nucleus (IPN). IPI activation during nicotine withdrawal was mediated by increased corticotropin releasing factor (CRF) receptor-1 expression and signalling, which modulated glutamatergic input from the medial habenula (MHb). Pharmacological blockade of IPN CRF1 receptors or optogenetic silencing of MHb input reduced IPI activation and alleviated withdrawal-induced anxiety; whereas IPN CRF infusion in mice increased anxiety. We identified a mesointerpeduncular circuit, consisting of ventral tegmental area (VTA) dopaminergic neurons projecting to the IPN, as a potential source of CRF. Knockdown of CRF synthesis in the VTA prevented IPI activation and anxiety during nicotine withdrawal. These data indicate that increased CRF receptor signalling within a VTA-IPN-MHb circuit triggers anxiety during nicotine withdrawal.