Psychotic symptoms are prominent in schizophrenia and a frequent neuropsychiatric manifestation of Alzheimer's disease (AD), occurring in approximately 50% of patients affected. The shared psychiatric symptoms suggest common cerebral pathophysiologies. Radiologic and pathologic findings indicate a predilection toward limbic involvement, with structural and atrophic changes of the medical temporal region predominating in both disorders. Neurochemical alterations affecting the dopaminergic/cholinergic axis appear to be central to both schizophrenia and AD. The basic pathologies of the two disorders are different, but they have similarities in the pattern of regional brain dysfunction, biochemical dysfunction, and symptomatology. We represent a selective review of these similarities. Insights drawn from these observations enrich the understanding of each disorder.