Using a relatively dense genetic map of 72 single-nucleotide polymorphisms (SNPs) distributed across the entire 1.5-Mb locus on chromosome 22q11 associated with susceptibilit to schizophrenia, we previously identified two subregions that were consistently associated with the disease. In the distal subregion, we detected an association signal with five neighboring SNPs distributed over a haplotypic block of 80 kb encompassing six known genes. One of these five SNPs, rs175174, had the strongest association of all 72 SNPs that we tested. Here we show that rs175174 regulates the level of the fully functional transcript by modulating the retention of intron 4 of the gene ZDHHC8, which encodes a putative transmembrane palmitoyltransferase. Zdhhc8-knockout mice had a sexually dimorphic deficit in prepulse inhibition, a gene dosage-dependent decrease in exploratory activity in a new environment and a decreased sensitivity to the locomotor stimulatory effects of the psychomimetic drug dizocilpine (MK801). SNP rs175174 shows differences in transmission distortion between sexes in individuals with schizophrenia. Our results indicate that there is an unexpected connection between impaired palmitate modification of neuronal proteins and the psychiatric phenotypes associated with microdeletions of chromosome 22q11.