Despite our understanding of chemical defenses and their consequences for plant performance and herbivores, we know little about whether defensive chemicals in plant tissues, such as alkaloids, and their spatial variation within a population play unappreciated and critical roles in plant-herbivore interactions. Neighboring plants can decrease or increase attractiveness of a plant to herbivores, an example of a neighborhood effect. Chemical defensive traits may contribute to neighborhood effects in plant-herbivore interactions. We examined the effects of nicotine in leaves (a non-emitted defense chemical) on plant-herbivore interactions in a spatial context, using two varieties of Nicotiana tabacum with different nicotine levels. A common garden experiment demonstrated that visits by grasshoppers decreased with increasing density of neighboring plants with a greater nicotine level. In contrast, visits of leaf caterpillars were not affected by neighbors, irrespective of nicotine levels. Thus, our results clearly highlighted that the neighborhood effect caused by the nicotine in leaves depended on the insect identity, and it was mediated by plant-herbivore interactions, rather than plant-plant interactions. This study demonstrates that understanding of effects of plant defensive traits on plant-herbivore interactions requires careful consideration of the spatial distribution of plant defenses, and provides support for the importance of spatial context to accurately capture the ecological and evolutionary consequences of plant-herbivore interactions.