Evolutionary changes in brain and craniofacial development have endowed humans with unique cognitive and social skills, but also predisposed us to debilitating disorders in which these traits are disrupted. What are the developmental genetic underpinnings that connect the adaptive evolution of our cognition and sociality with the persistence of mental disorders with severe negative fitness effects? We argue that loss of function of genes involved in transcriptional regulation represents a crucial link between the evolution and dysfunction of human cognitive and social traits. The argument is based on haploinsufficiency of many transcriptional regulator genes, which makes them particularly sensitive to loss-of-function mutations. We discuss how human brain and craniofacial traits evolved through partial loss of function (i.e., reduced expression) of these genes, a perspective compatible with the idea of human self-domestication. Moreover, we explain why selection against loss-of-function variants supports the view that mutation-selection-drift, rather than balancing selection, underlies the persistence of psychiatric disorders. Finally, we discuss testable predictions.