Various criteria used to define atypical antipsychotic drugs include: 1) decrease, or absence, of the capacity to cause acute extrapyramidal motor side effects (acute EPSE) and tardive dyskinesia (TD); 2) increased therapeutic efficacy reflected by improvement in positive, negative, or cognitive symptoms; 3) and a decrease, or absence, of the capacity to increase prolactin levels. The pharmacologic basis of atypical antipsychotic drug activity has been the target of intensive study since the significance of clozapine was first appreciated. Three notions have been utilized conceptually to explain the distinction between atypical versus typical antipsychotic drugs: 1) dose-response separation between particular pharmacologic functions; 2) anatomic specificity of particular pharmacologic activities; 3) neurotransmitter receptor interactions and pharmacodynamics. These conceptual bases are not mutually exclusive, and the demonstration of limbic versus extrapyramidal motor functional selectivity is apparent within each arbitrary theoretical base. This review discusses salient distinctions predominantly between prototypic atypical and typical antipsychotic drugs such as clozapine and haloperidol, respectively. In addition, areas of common function between atypical and typical antipsychotic drug action may also be crucial to our identification of pathophysiological foci of the different dimensions of schizophrenia, including positive symptoms, negative symptoms, and neurocognitive deficits.