Genome-wide association studies (GWASs) have reported many single nucleotide polymorphisms (SNPs) associated with psychiatric disorders, but knowledge is lacking regarding molecular mechanisms. Here we show that risk alleles spanning multiple genes across the 10q24.32 schizophrenia-related locus are associated in the human brain selectively with an increase in the expression of both BLOC-1 related complex subunit 7 (BORCS7) and a previously uncharacterized, human-specific arsenite methyltransferase (AS3MT) isoform (AS3MT(d2d3)), which lacks arsenite methyltransferase activity and is more abundant in individuals with schizophrenia than in controls. Conditional-expression analysis suggests that BORCS7 and AS3MT(d2d3) signals are largely independent. GWAS risk SNPs across this region are linked with a variable number tandem repeat (VNTR) polymorphism in the first exon of AS3MT that is associated with the expression of AS3MT(d2d3) in samples from both Caucasians and African Americans. The VNTR genotype predicts promoter activity in luciferase assays, as well as DNA methylation within the AS3MT gene. Both AS3MT(d2d3) and BORCS7 are expressed in adult human neurons and astrocytes, and they are upregulated during human stem cell differentiation toward neuronal fates. Our results provide a molecular explanation for the prominent 10q24.32 locus association, including a novel and evolutionarily recent protein that is involved in early brain development and confers risk for psychiatric illness.