Nicholas began his career as a youth with the Celtic Boys Club, before signing for Celtic in 1979. He made his first team debut at 17 years of age on 14 August 1979 in a Glasgow Cup tie against Queens Park, scoring Celtic’s second goal in a 3–1 win. Aside from his goal, the youngster displayed alertness and confidence. He made his second appearance in the next round of the same competition on 22 August, opening the scoring in a 3–0 win over Clyde and providing the assist for Bobby Lennox to score Celtic’s third goal. Nicholas returned to playing for the reserves again for the rest of the season. His next first team outing was in July 1980 in a Drybrough Cup tie against Ayr United. Celtic lost 1–0 in a poor showing, although Nicholas continued to impress with his quick and busy play.
His first appearance for Celtic in a major competition came on 16 August 1980 when he replaced the injured Frank McGarvey during the second half of Celtic’s 3–0 win away against Kilmarnock in the league. Nicholas began to feature regularly for Celtic, and on 30 August scored his first goals in major competition when he netted twice during a 6–1 win over Stirling Albion in the Scottish League Cup. Playing up front alongside one of either Frank McGarvey or George McCluskey, he went on to score 20 goals in 23 games up to the end of December 1980. He continued to score regularly after the turn of the year, including two goals against Rangers in February 1981 as Celtic came from behind to win 3–1 and go top of the league. Manager Billy McNeill praised Nicholas, stating “It’s a wonderful thing for a youngster to score twice in one of those [ Old Firm ] games”, adding that “The world is going to hear a lot more about Charlie [Nicholas]”. He finished the season with a total of 28 goals, the last of which he scored in a 1–0 win over Rangers in April 1981, as Celtic clinched the Scottish Premier League title.
The following season saw Nicholas play less regularly, having lost his place in the side to McCluskey. Worse, he suffered a broken leg in a friendly match against Morton in January 1982 and missed the rest of the season.
Nicholas returned to the team for the start of season 1982–83 in August 1982, playing in all six matches of the group stages of the 1982–83 Scottish League Cup, scoring seven goals as Celtic qualified with ease, including a four-goal haul in a 7–1 rout of Dunfermline. Celtic, and Nicholas, continued their goalscoring form into the league campaign, and by mid September Nicholas had amassed a total of 16 goals. Celtic faced Ajax in the first round of the European Cup in September 1982. Nicholas scored a penalty in the first leg at Parkhead, which finished 2–2 on the night. Celtic went into the second leg as underdogs, but an outstanding goal by Nicholas put Celtic ahead in Amsterdam. In a move also involving Paul McStay and Frank McGarvey, Nicholas received the ball from McGarvey and ran into the Ajax penalty box. He evaded two tackles from Ajax defenders before curling an excellently placed left-foot finish past goalkeeper Piet Schrijvers. Ajax later scored themselves, but a last minute winner from George McCluskey saw Celtic progress 3–2 on aggregate. Nicholas later said of his goal, “That was probably my all-time favourite goal. My greatest game.”
Nicholas was now being described as the most outstanding young player to emerge in Scotland since Kenny Dalglish. He displayed an excellent touch and great vision on the ball and possessed a strong shot with both feet. The only asset he lacked was a turn of pace, although his other attributes covered for that. His partnership up front with Frank McGarvey helped Nicholas become the leading goalscorer in Scotland and one of the best strikers in the British game. On 4 December 1982, he opened the scoring for Celtic in their 2–1 win over Rangers in the 1982 Scottish League Cup Final. After New Year, Nicholas became the centre of intense media speculation linking him with a move to England; with television, radio and newspapers journalists travelling north to cover Nicholas’ goalscoring exploits. The Celtic star was featured regularly on the Saturday lunch-time television show Saint and Greavsie which showed Nicholas’ latest goals. Despite his prolific goalscoring, the uncertainty over his future at Celtic appeared to unsettle the team towards the end of the season and they ended up losing the league to Dundee United. In the final league match of the season, Nicholas scored twice from penalty kicks as Celtic recovered from a 2–0 deficit at half-time against Rangers to win 4–2. At the end of the game he ran behind the goal to wave what appeared to be his “goodbyes” to the Celtic fans.
He finished the season with 48 goals and won both the Scottish PFA Player of the Year and Scottish Football Writers’ Player of the Year awards. The weeks that followed the end of the season saw Liverpool, Manchester United and Arsenal all being strongly linked with signing Nicholas. Liverpool’s Kenny Dalglish and Graeme Souness, whom Nicholas knew from being with in the Scotland international squad, made strenuous efforts to persuade Nicholas to come to Anfield. Tottenham Hotspur and Inter Milan were also interested in signing the Celtic player.
In summer 1990, Nicholas returned to Celtic. However, His comeback season at Parkhead was something of a disappointment as he played just 14 games and scored six goals in the league. The arrival of new manager Liam Brady at Celtic in 1992 saw an improvement in fortune for Nicholas, and he went on to score 21 league goals during season 1991–92. In March 1992 he scored two outstanding goals in consecutive weeks. On 21 March he opened the scoring at Ibrox in a 2–0 win over Rangers; taking a long ball from a Chris Morris free kick, he volleyed home a powerful shot with great technique past goalkeeper Andy Goram. A week later on 28 March, he ran across the Dundee United defence 25 yards out and suddenly chipped the ball past an unsuspecting Alan Main who never had a chance to move. Despite his goalscoring, Celtic again failed to win any silverware. He lost his place in the team halfway through 1992–93 as Celtic bought Frank McAvennie, but regained his place the following season as McAvennie fell out of favour and was eventually discarded. However, his final season at the club was a disappointment as he played in 12 out of 36 league games and failed to score a single goal. He was left out of the 1995 Scottish Cup final against Airdrie and so Celtic released him and he moved on for the last time.