In India, tobacco (nicotine) addiction among youth has increased, leading to substantial socioeconomic burdens, mortality, and morbidity. While minimal short-term nicotine consumption may have antioxidant effects, chronic exposure results in various adverse health outcomes. This study examines the impact of chronic nicotine consumption on cellular oxidative stress and psychological stress, and their correlation with Homocysteine (Hcy) levels in unemployed tobacco consumers. This case-control study included 156 healthy, educated, unemployed male volunteers aged 20–40 years, divided into nicotine-addicted (n = 80) and non-addicted (n = 76) groups. Psychological stress was assessed using perceived stress scales (PSS) and coping self-efficacy (CSE) scales. Oxidative stress markers, including Malondialdehyde (MDA), Superoxide Dismutase (SOD), and Catalase, were measured. Hcy levels were quantified using high-performance liquid chromatography (HPLC). Nicotine-addicted participants exhibited significantly higher perceived stress (p = 0.0001) and lower coping self-efficacy (p = 0.0001) compared to non-addicted individuals. MDA levels in erythrocytes were significantly increased (p = 0.0006), while SOD (p = 0.0001) and Catalase (p = 0.02) activities were significantly decreased in the addicted group. Nicotine intake influenced Hcy concentrations, with 55% of addicted individuals falling into moderate, 27.5% into intermediate, and 7.5% into severe Hcy categories. Chronic nicotine intake also reflected the hematological parameters (WBCs, RBCs, HGB, and Platelets). Chronic tobacco consumption induces oxidative stress and perceived psychological stress, leading to elevated Hcy levels in nicotine consumers. The study highlights the detrimental effects of nicotine addiction on cellular defensive mechanisms, emphasizing the need for targeted interventions to address this growing health issue among unemployed Indian youth.