Motivational and perceptual disturbances co-occur in psychosis and have been linked to aberrations in reward learning and sensory gating, respectively. Although traditionally studied independently, when viewed through a predictive coding framework, these processes can both be linked to dysfunction in striatal dopaminergic prediction error signaling. This study examined whether reward learning and sensory gating are correlated in individuals with psychotic disorders, and whether nicotine—a psychostimulant that amplifies phasic striatal dopamine firing—is a common modulator of these two processes. We recruited 183 patients with psychotic disorders (79 schizophrenia, 104 psychotic bipolar disorder) and 129 controls and assessed reward learning (behavioral probabilistic reward task), sensory gating (P50 event-related potential), and smoking history. Reward learning and sensory gating were correlated across the sample. Smoking influenced reward learning and sensory gating in both patient groups; however, the effects were in opposite directions. Specifically, smoking was associated with improved performance in individuals with schizophrenia but impaired performance in individuals with psychotic bipolar disorder. These findings suggest that reward learning and sensory gating are linked and modulated by smoking. However, disorder-specific associations with smoking suggest that nicotine may expose pathophysiological differences in the architecture and function of prediction error circuitry in these overlapping yet distinct psychotic disorders.