More than 10 studies have consistently shown that around one-third of all schizophrenia incidence may be related to unknown but likely unconfounded environmental factors operating in the urban environment that have an impact on developing children and adolescents to increase, relatively specifically, the later expression of psychosis-like at-risk mental states and overt psychotic disorders. The available evidence suggests that causation (urban environment causes psychosis) is more important than selection (high-risk individuals move into urban areas) and that the effect of the environmental factors in the urban environment is conditional on genetic risk (i.e., there may be gene-environment interaction). The effect associated with urbanicity has grown in more recent birth cohorts, while studies focusing on within-city contrasts have found important within-city variation in the incidence of schizophrenia associated with neighborhood social characteristics. Future approaches may focus on the complex interactions between neighborhood cognitive social capital and genetic risk as the substrate for the increased incidence of schizophrenia in the increasingly urbanized areas that children are growing up in.