Psychosis, defined as a set of symptoms that results in a distorted sense of reality, is observed in several psychiatric disorders in addition to schizophrenia. This paper reviews the literature relevant to the underlying neurobiology of psychosis. The dopamine hypothesis has been a major influence in the study of the neurochemistry of psychosis and in development of antipsychotic drugs. However, it became clear early on that other factors must be involved in the dysfunction involved in psychosis. In the current review, it is reported how several of these factors, namely dysregulation of neurotransmitters [dopamine, serotonin, glutamate, and γ-aminobutyric acid (GABA)], neuroinflammation, glia (microglia, astrocytes, and oligodendrocytes), the hypothalamic–pituitary–adrenal axis, the gut microbiome, oxidative stress, and mitochondrial dysfunction contribute to psychosis and interact with one another. Research on psychosis has increased knowledge of the complexity of psychotic disorders. Potential new pharmacotherapies, including combinations of drugs (with pre- and probiotics in some cases) affecting several of the factors mentioned above, have been suggested. Similarly, several putative biomarkers, particularly those related to the immune system, have been proposed. Future research on both pharmacotherapy and biomarkers will require better-designed studies conducted on an all stages of psychotic disorders and must consider confounders such as sex differences and comorbidity.