Sensory gating abnormalities are an early clinical symptom of schizophrenia, and are characterized by a decrease in the brain's normal ability to inhibit the response to unimportant stimuli. Patients appear hypervigilant and have difficulty focusing their attention. A neurobiologic mechanism involved in these difficulties is nicotinic cholinergic modulation of inhibitory neuronal activity in the hippocampus. One measure of sensory gating abnormalities, diminished inhibition of the P50 evoked response to repeated auditory stimuli, has been linked to the chromosome 15q14 locus of the alpha-7-nicotinic receptor gene. This site is one of several that have shown evidence for linkage to schizophrenia, as well as to bipolar disorder, across several studies. Polymorphisms in the core promoter of the gene are associated with schizophrenia and also with diminished inhibition of the P50 response. These genetic data may identify a new pathophysiologic target for drug discovery.