Schizophrenia is a devastating psychiatric disorder characterized by positive, negative and cognitive symptoms. While aberrant dopamine system function is typically associated with the positive symptoms of the disease, it is thought that this is secondary to pathology in afferent regions. Indeed, schizophrenia patients show dysregulated activity in the hippocampus and prefrontal cortex, two regions known to regulate dopamine neuron activity. These deficits in hippocampal and prefrontal cortical function are thought to result, in part, from reductions in inhibitory interneuron function in these brain regions. Therefore, it has been hypothesized that restoring interneuron function in the hippocampus and/or prefrontal cortex may be an effective treatment strategy for schizophrenia. In this article, we will discuss the evidence for interneuron pathology in schizophrenia and review recent advances in our understanding of interneuron development. Finally, we will explore how these advances have allowed us to test the therapeutic value of interneuron transplants in multiple preclinical models of schizophrenia.