Schizophrenia is a complex psychiatric disorder with a developmental component that compromises neural circuits. Understanding the neuropathological basis of schizophrenia remains a major challenge for establishing new therapeutic approaches. In this review, causal factors for abnormal brain development in schizophrenia are discussed, with particular focus on N-methyl-D-aspartate (NMDA) receptor hypofunction and GABAergic circuit-mediated neurotransmission. Changes in interneuron structure and function have been reported in schizophrenia, and current evidence points to a specific involvement of interneuronal NMDA receptor signaling. Furthermore, altered gamma-band oscillations in schizophrenic patients drew attention to a possible deficit in fast-spiking parvalbumin-expressing interneurons, which play an essential role in regulating complex interaction between pyramidal cells, and represent a key to the understanding of network operations. Here, we describe the major biochemical, neuropathological, and cognitive deficits present in schizophrenic human individuals, and the faithfulness of animal models for mimicking those impairments. In NMDA receptor antagonism-based animal models, repeated injections of MK-801 (dizocilpine) during early postnatal brain development, disrupt the excitation/inhibition balance. A unifying hypothesis to explain the altered brain function in this model is a specific perturbation of GABAergic cells that results in long-term structural brain changes and modified network activity in adulthood, especially when MK-801 is administered during neurodevelopment. Subsequent impairment in cognition, particularly working memory and associative memory, are extremely relevant for schizophrenia research.