The pharmacodynamics of cocaine are complex. One significant effect of cocaine on the central nervous system is the blockage of the dopamine transporter protein (DAT), hence cocaine is called a dopamine reuptake inhibitor. Brain regions that are rich with dopaminergic neurons are the ventral tegmental area (VTA), and the substantia nigra (SN).

The dopamine (DA) neurons of the VTA send axons to the nucleus accumbens (nAC) and the prefrontal cortex (PFC) and release DA presynaptically on the neurons in these regions. While the precise role of DA in the subjective experience of reward is controversial among neuroscientists, the release of DA in the nAC is widely considered to be responsible for cocaine's rewarding effects. This conclusion is largely based on laboratory data involving rats that are trained to self-administer cocaine intravenously (i.v.). If DA antagonists are infused directly into the nAC, well-trained rats self-administering cocaine will undergo extinction (i.e., initially increase responding only to stop completely) thereby indicating that cocaine is no longer reinforcing (i.e., rewarding) drug-seeking behaviour.

A monoamine transmitter by a neuron for signal firing is normally recycled via the transporter to terminate the signal and to spare transmitter resources. The transporter binds the transmitter and pumps it out of the synaptic cleft back into the pre-synaptic neuron. There it is taken up into storage vesicles. Cocaine binds tightly at the DAT forming a complex that blocks the transporter's function, this also blocks the reuptake of the transmitter. Once released into the extracellular space (synaptic cleft) dopamine accumulates there, because the recycling mechanism is inhibited by the cocaine.

This results in an enhanced and prolonged post-synaptic effect of dopaminergic signalling at dopamine receptors on the receiving neuron. Prolonged exposure to cocaine, as occurs with habitual use, leads to homeostatic dysregulation of normal (i.e., without cocaine) dopaminergic signaling via downregulation of D1 receptors and enhanced signal transduction. The decreased dopaminergic signalling after chronic cocaine use may contribute to depressive mood disorders and sensitize this important brain reward circuit to the reinforcing effects of cocaine (e.g., enhanced dopaminergic signalling only when cocaine is self-administered).

This sensitization contributes to the intractable nature of addiction and relapse. Cocaine is also a less potent blocker of the norepinephrine transporter (NET) and serotonin transporter (SERT). Cocaine also blocks sodium channels, thereby interfering with the propagation of action potentials; thus, like lignocaine and novocaine, it acts as a local anesthetic. Cocaine also causes vasoconstriction, thus reducing bleeding during minor surgical procedures. The locomotor enhancing properties of cocaine may be attributable to its enhancement of dopaminergic transmission from the substantia nigra.

Recent research points to an important role of circadian mechanisms and clock genes in behavioral actions of cocaine. Because nicotine increases the levels of dopamine in the brain, many cocaine users find that consumption of tobacco products during cocaine use enhances the euphoria. This, however, may have undesirable consequences, such as uncontrollable chain smoking during cocaine use (even users who don't normally smoke cigarettes have been known to chain smoke when using cocaine), in addition to the detrimental health effects and the additional strain on the cardiovascular system caused by tobacco.

Metabolism and excretion
Cocaine is extensively metabolized, primarily in the liver, with only about 1% excreted unchanged in the urine. The metabolism is dominated by hydrolytic ester cleavage, so the eliminated metabolites consist mostly of benzoylecgonine, the major metabolite, and in lesser amounts ecgonine methyl ester and ecgonine.

If taken with alcohol, cocaine combines with the ethanol in the liver to form cocaethylene, which is both more euphorigenic and has higher cardiovascular toxicity than cocaine by itself. Cocaine metabolites are detectable in urine for up to four days after cocaine is used. Benzoylecgonine can be detected in urine within four hours after cocaine inhalation and remains detectable in concentrations greater than 1000 ng/ml for as long as 48 hours. Detection in hair is possible in regular users until the sections of hair grown during use are cut or fall out.