The dopamine hypothesis of schizophrenia has been a driving force in guiding both theories of pathophysiology of schizophrenia, and drug discovery efforts in this area. While this path has been fruitful in producing a deeper understanding of the disorder and a variety of antipsychotic drugs, it is generally recognized that targeting the D(2) dopamine receptor has multiple shortcomings. Recently, alterations in the glutamatergic system have been proposed to play a key role in the neurochemical disruptions underlying schizophrenia. In particular, the similarities between the symptoms of schizophrenia and the psychotomimetic effects of non-competitive N-methyl D-aspartate (NMDA) receptor antagonists such as phencyclidine have spurred interest in the possibility that an NMDA receptor hypofunctional state might underlie schizophrenia. In this review, we summarize the NMDA hypofunction hypothesis of schizophrenia, and focus on the NMDA receptor as a potential target for novel antipsychotic agents. Both modulatory sites on the NMDA receptor, as well as G-protein coupled receptors such as the muscarinic and metabotropic glutamate receptors that modulate the NMDA receptor, are potential targets for the development of novel compounds that could ameliorate the symptoms of schizophrenia.