Summary: Although the second-generation or atypical antipsychotic drugs have been breakthrough medicines for the treatment of schizophrenia and other psychotic conditions, cognitive dysfunction and to some extent negative symptoms of the disease continue to be the main cause of poor vocational status of the patients. Thus, the majority of investigational drug development efforts today target these unmet medical needs. This review postulates that the field of schizophrenia research has advanced sufficiently to develop biochemical hypotheses of the etiopathology of the disease and target the same for revolutionary disease modifying therapy. This postulate is based on recent studies that have begun to provide a testable etiopathology model that integrates interactions between genetic vulnerability factors, neurodevelopmental anomalies, and neurotransmitter systems. This review begins with a brief overview of the nosology and etiopathology of schizophrenia and related psychotic disorders to establish a context for subsequent detailed discussions on drug discovery and development for psychotic disorders. Particular emphasis is placed on recent advances in genetic association studies of schizophrenia and how this can be integrated with evidence supporting neurodevelopmental abnormalities associated with the disease to generate a testable model of the disease etiopathology. An in-depth review of the plethora of new targets and approaches targeting the unmet medical need in the treatment of schizophrenia exemplify the challenges and opportunities in this area. We end the review by offering an approach based on emerging genetic, clinical, and neurobiological studies to discover and validate novel drug targets that could be classified as disease modifying approaches.