Nicholson became nationally known to drag racing fans when he won the Stock class at NHRA's first Winternationals in 1961 with a 12-second pass; he and Ronnie Sox raced the only two Chevrolets, when Fords were the standard. The win helped his business in Southern California, and gave him access to factory-developed Chevrolets and special racing parts. He repeated as the 1962 Winternationals winner. He received lucrative offers from promoters in the Southeastern United States, so moved to Atlanta to compete in match races. Chevrolet and the other American car manufacturers decided to drop their factory backing in 1963 and his vehicle became uncompetitive. He switched to a Mercury Comet for 1964 in the A/Factory Experimental (A/FX) class. He won over 90 percent of match races he entered that year. That year he made the first 10-second pass in a doorslammer, as well as being the first driver to lift the front wheels when he shifted gears.

Funny Car

In 1965, Dodge and Plymouth teams moved their front and rear wheels forward, giving them greater traction. These new "funny cars" were not allowed in NHRA meets. Ford disallowed their factory-supported Ford and Mercury teams competing against these new Mopar funny cars. Nicholson was concerned about losing his match racing income since his car was outclassed. That August, he converted his steel-bodied four-speed car to ah A/FX, switching to nitromethane and fuel injection and moving the rear axle forward 12 in (30 cm). Several weeks later, he defeated the Ramcharger Dodge, the top Mopar entry, with a 9.30 second pass at 150 mph (240 km/h).

Mercury commissioned a new tube chassis Comet for 1966. The Logghe Bros.-built car featured a one piece flip-top body. Nicholson's car, Eliminator I, was rarely defeated that season. It clocked the first 7-second e.t. in Funny Car at Michigan in the second half of 1966. The only driver capable of defeating Eliminator I was Nicholson's teammate Eddie Schartman. Nicholson was so dominant, critics predicted the demise of the new Funny Car "craze". He enjoyed another highly successful year in Eliminator II in 1967, until other teams started adding superchargers late in the year. Other teams had run superchargers before, but by the middle of 1967, tire technology had caught up to the power produced by these cars and they began to "hook up" better rather than just spin the tires. Nicholson started the 1968 season with his now-supercharged Comet. He won the Irwindale New Year's Day race, where he qualified number two with a 8.03 and went on to set low e.t. of the meet at 7.99, and won the event. At the AHRA meet at Lion's Dragway in January, he qualified number one (low e.t.) with a strong 7.63 but failed to win the meet. He did win the second annual Stardust National Open, beating Schartman in the final round, with a 7.83 pass, low e.t. of the meet. Most of Nicholson's earnings at this time came from match race competition.