The dopamine hypothesis of schizophrenia is the principal explanatory model of antipsychotic drug action. Recent discoveries extend our understanding of the neurochemistry of schizophrenia, with increasing evidence of dysfunction in glutamate and GABA as well as dopamine systems. In this review, we study the evidence for dopaminergic dysfunction in schizophrenia, drawing data from neurochemical imaging studies. We also review the NMDA receptor hypofunction hypothesis of schizophrenia as a supplementary explanatory model for the illness. We examine predictions made by the NMDA receptor hypofunction hypothesis and consider how they fit with current neurochemical findings in patients and animal models. We consider the case for glutamatergic excitotoxicity as a key process in the development and progression of schizophrenia, and suggest ways in which glutamate and dopamine dysregulation may interact in the condition.