This review presents the current state of knowledge on cotinine, the major metabolite of nicotine. Special attention is paid to the formation of this compound in the organism, its metabolism, application in diagnostic procedures and evaluation of its in vitro and in vivo activities. For many years, cotinine has been used as a biomarker of exposure to tobacco smoke. Currently, this compound is applied in many other studies including the use of cotinine in the treatment of various diseases. Several years ago, Scott et al. patented therapeutic applications of cotinine in chronic and acute inflammation. Cotinine is an interesting compound with a well-known metabolism; therefore there are suggestions for its application in the diagnosis and treatment of certain diseases.