Cognitive impairment in schizophrenia occurs in the early phases of the disease and remains throughout its course. The basis for cognition lies in two main brain regions: the prefrontal cortex and hippocampus. Positron emission tomography, functional magnetic resonance imaging, and proton magnetic spectroscopy studies have shown that prefrontal cortex and hippocampus activity and cell density are lower in patients with schizophrenia than in healthy controls. Dopamine remains the fundamental neurotransmitter involved with schizophrenia. Catechol- O -methyltransferase accounts for about 60% of dopamine metabolism in the prefrontal cortex. Functional polymorphism for the catechol- O -methyltransferase genotypes has been identified in patients with schizophrenia. Those with the valine-valine genotype demonstrate rapid inactivation of dopamine, and performance in cognitive testing in patients is poorer with this allele than with other genotypes. N -methyl-D-aspartate and alpha-amino-3-hydroxy-5-methyl-4-isoxazolepropionate acid receptors are also strongly associated with cognitive impairment. Changes occur in apolipoproteins D and E, cholinesterase enzyme activity, neurotensin, and neural growth factors, leading to a possible neurodegenerative process and cognitive impairment in patients with schizophrenia. A fundamental link between psychosis and neurocognition probably arises from complex interactions between these systems at the intracellular secondary messenger system and with protein phosphorylation. Atypical antipsychotics evaluated in receptor models, cell cultures, and animal behavior paradigms indicate that these agents may provide neuroprotective effects. Clinical studies with atypical antipsychotics have consistently demonstrated improvement in cognitive symptoms, and such improvement appears to be correlated with improvement of negative symptoms. A neurodevelopmental model of cognitive impairment in schizophrenia aids in understanding why atypical antipsychotics improve cognitive symptoms.