Overactive dopamine transmission in psychosis is predicted to unbalance striatal output via D1- and D2-dopamine receptor-expressing spiny-projection neurons (SPNs). Antipsychotic drugs are thought to re-balance this output by blocking D2-receptor signaling. Here we imaged D1- and D2-SPN Ca2+ dynamics in mice to determine the neural signatures of antipsychotic effect. Initially we compared effective (clozapine and haloperidol) antipsychotics to a candidate drug that failed in clinical trials (MP-10). Clozapine and haloperidol normalized hyperdopaminergic D1-SPN dynamics, while MP-10 only normalized D2-SPN activity. Clozapine, haloperidol or chemogenetic manipulations of D1-SPNs also normalized sensorimotor gating. Given the surprising correlation between clinical efficacy and D1-SPN modulation, we evaluated compounds that selectively target D1-SPNs. D1R partial agonism, antagonism, or positive M4 cholinergic receptor modulation all normalized the levels of D1-SPN activity, locomotion, and sensorimotor gating. Our results suggest that D1-SPN activity is a more relevant therapeutic target than D2-SPN activity for the development of effective antipsychotics.