BACKGROUND Sensory encoding deficits have been extensively studied as endophenotypic markers of schizophrenia using auditory evoked potentials. In order to increase understanding of the neurochemical basis of such deficits, we utilized an animal model to test whether monoamine reuptake inhibition and nicotine receptor antagonism reduce the amplitude and gating of the P20 and N40 auditory components. METHODS C57BL/6J mice received 12 days of chronic vehicle, bupropion, haloperidol or bupropion plus haloperidol. Auditory evoked potentials were then recorded in alert mice to measure the amplitude and gating of evoked components during a paired click paradigm similar to tasks used to measure the P50 and N100 auditory potentials in schizophrenia. Evoked potentials were recorded prior to and following acute nicotine. RESULTS Bupropion reduced the amplitude and gating of the N40 evoked potential in mice, similar to the P50 and N100 endophenotypes associated with sensory encoding deficits in schizophrenia. This deficit was fully reversed only by the combination of haloperidol and nicotine, suggesting that dopamine reuptake inhibition and nicotine antagonism both contribute to the observed phenotype. Furthermore, nicotine increased P20 amplitude across all groups supporting a role for nicotine agonists in pre-attentive sensory encoding deficits. CONCLUSIONS We propose that the combination of monoamine inhibition and nicotine receptor antagonism may serve as a useful model for preclinical screening of pharmaceutical compounds aimed at treating sensory encoding deficits in schizophrenia.