Clozapine is the first of a new generation of antipsychotic drugs which constitutes a major advance in the treatment of schizophrenia. Numerous theories have been proposed to explain the advantages of clozapine over typical neuroleptics. Most of these focus on its effects on dopaminergic and serotonergic neurotransmission. This article reviews the effects of clozapine and related antipsychotic drugs on dopamine (DA) D1, D2, and D4, and serotonin (5-HT) 5-HT2A, 5-HT2C, 5-HT3, 5-HT6, and 5-HT7 receptors, as well as its ability to modulate DA and 5-HT release. Clozapine and other atypical antipsychotic drugs share the ability to cause fewer extrapyramidal symptoms at clinically effective doses. This may be related to their potent 5-HT2A and weak D2 receptor blocking properties, a profile shared by risperidone, melperone, olanzapine, amperozide, HP-873, seroquel, sertindole, and ziprasidone. The basis for the superior ability of clozapine to treat negative symptoms and enhance cognitive function compared to typical neuroleptic drugs in schizophrenic patients has not yet been ascertained, but there is evidence that its effect on 5-HT2A, D2, or D4 receptors may be important. Other aspects of the pharmacology of clozapine which may contribute to its actions include potent alpha 1-adrenergic, M1, M2, M3, and M5 receptor blocking properties, as well as M4 agonist effects.