Reward processing is a complex task that is arguably the most important motivational force behind decision-making and actions. Rewarding and aversive events are processed by comparing reality with expectations. The result of the comparison, termed temporal difference error, influences the likelihood that the behavior immediately preceding the event will be repeated and alters future expectations of reward. A variety of brain regions are hypothesized to be associated with the computation of this comparison; recent discoveries now include the habenula in this list. The aim of the experiments described in this thesis was to examine of the role of the habenula in reward processing. We hypothesized that the habenula plays a critical role in two core features of reward learning, signaling less than expected outcomes and action selection. To test this, we used a Pavlovian autoshaping procedure that quantifies the acquisition of learned association between predictive stimuli and outcomes as well as the attribution of incentive salience to reward predictive cues using conditioned approach to reward or stimuli, respectively. Dopamine antagonists, lesions of the output tract of the habenula (fasciculus retroflexus (fr)) and discretely time fr stimulation during reward processing were used to parse out the role the habenula plays in reward learning. The dopamine antagonist studies confirmed a role for dopamine in incentive salience attribution. Surprisingly, habenula lesion dramatically increases the incentive motivational salience attributed to a reward predictive cue. Conversely, stimulation had the inverse effect of reducing the salience of the reward predictive cue. These interventions were found to have a less than anticipated impact on behavior following `less than expected outcomes' (cue reversal). Further experimentation revealed that lesion of the Hb also prevented animals from developing discriminated approach to cues predictive of rewards with different outcome probabilities. Overall, the evidence suggests that the Hb is important for scaling relative incentive values of rewarded cues and refines habenula's role to include attribution of relative incentive value. A better understanding of how rewards and cues are evaluated under normal conditions improves our capacity to understand how certain mental disorders are altering motivation and decision making.