Although schizophrenia is defined by waking phenomena, abnormal sleep is a common feature. In particular, there is accumulating evidence of a sleep spindle deficit. Sleep spindles, a defining thalamocortical oscillation of non-rapid eye movement Stage 2 sleep, correlate with IQ and are thought to promote long-term potentiation and enhance memory consolidation. Here we review evidence that reduced spindle activity in schizophrenia is an endophenotype that impairs sleep-dependent memory consolidation, contributes to symptoms and is a novel treatment biomarker. Studies showing that spindles can be pharmacologically enhanced in schizophrenia and that increasing spindles improves memory in healthy individuals suggest that treating spindle deficits in schizophrenia may improve cognition. Spindle activity is highly heritable and recent large-scale genome-wide association studies have identified schizophrenia risk genes that may contribute to spindle deficits and illuminate their mechanisms. For example, the schizophrenia risk gene CACNA1I encodes a calcium channel that is abundantly expressed in the thalamic spindle generator and plays a critical role in spindle activity in a mouse knockout. Future genetic studies of animals and humans can delineate the role of this and other genes in spindles. Such cross-disciplinary research, by forging empirical links in causal chains from risk genes to proteins and cellular functions, through to endophenotypes, cognitive impairments, symptoms and diagnosis, has the potential to advance the mechanistic understanding, treatment and prevention of schizophrenia. This review highlights the importance of deficient sleep-dependent memory consolidation among the cognitive deficits of schizophrenia and implicates reduced sleep spindles as a potentially treatable mechanism.