In this article, we advance a unified hypothesis pertaining to combined dysfunction of dopamine and N-methyl-D-aspartate glutamate receptors that highlights N-methyl-D-aspartate receptor hypofunction as a key mechanism that can help explain major clinical and pathophysiological aspects of schizophrenia. The following fundamental features of schizophrenia are accommodated by this hypothesis: (1) the occurrence of structural brain changes during early development that have the potential for producing subsequent clinical manifestations of schizophrenia, (2) a quiescent period in infancy and adolescence before clinical manifestations are expressed, (3) onset in early adulthood of psychotic symptoms, (4) involvement of dopamine (D2) receptors in some cases but not others that would explain why some but not all patients are responsive to typical neuroleptic therapy, and (5) ongoing neurodegenerative changes and cognitive deterioration in some patients. We propose that since N-methyl-D-aspartate receptor hypofunction can cause psychosis in humans and corticolimbic neurodegenerative changes in the rat brain, and since these changes are prevented by certain antipsychotic drugs, including atypical neuroleptic agents (clozapine, olanzapine, fluperlapine), a better understanding of the N-methyl-D-aspartate receptor hypofunction mechanism and ways of preventing its neurodegenerative consequences in the rat brain may lead to improved pharmacotherapy in schizophrenia.