One hundred years after its conceptual definition as 'Dementia Praecox' by Emil Kraepelin, schizophrenia is still a serious psychiatric illness that affects young adults and leads to disability in at least half of patients. The key treatment issue is partial or non-response, especially of negative symptoms. The illness is also associated with different degrees of cognitive dysfunction, particularly in verbal and working memory; the resulting functional impairment may lead to unemployment and an inability to maintain stable relationships. Patients' cognitive dysfunction led Kraepelin to the assumption that schizophrenia is a form of juvenile dementia caused by a degenerative process of the human brain. Postmortem studies and a plethora of imaging studies do not support the notion of a degenerative process, but such a process is supported by the recently published, largest genome-wide association study on schizophrenia. More than a 100 hits were described, converging on pathways that have a significant role in dopamine metabolism in immune modulation, calcium signalling and synaptic plasticity. This review suggests that research should focus on animal models based on risk genes like transcription factor 4 and study the effects of exposure to environmental stressors relevant for schizophrenia. The use of relevant end points like pre-pulse inhibition or cognitive dysfunction will allow us to gain an understanding of the molecular pathways in schizophrenia and consequently result in improved treatment options, especially for the disabling aspects of this illness.