In this paper the neuroimmunology of schizophrenia and major depression will be reviewed. The causal role the neuropeptides, cytokines and insulin play in the pathogenesis of positive and negative schizophrenia and major depression will be examined. Numerous studies have shown there is an intimate interaction between certain cytokines and neuropeptides, possibly because the neuropeptides are exclusively synthesized in immune cells. When this relationship is dysregulated, a self‐perpetuating pathobiochemical network is established that becomes difficult to reverse. This disruption to normal metabolism also involves insulin which becomes dysregulated by the inflammatory cytokines: interleukin‐1 (IL‐1), IL‐6, tumour necrosis factor‐alpha (TNF‐α) and interferon‐gamma (IFN‐γ). Each of these cytokines can independently inhibit and/or increase insulin secretion, but they can also function synergistically, which compounds the influence on insulin secretion. An hypothesis is proposed that: (i) when brain insulin is elevated, energy metabolism and neurotransmission is hyperactive resulting in the positive symptoms of schizophrenia; and (ii) when brain insulin is inhibited, energy metabolism and neurotransmission is hypoactive resulting in either the negative symptoms of schizophrenia or major depression. It is our intention to develop a neuroimmunological model of positive and negative schizophrenia and major depression based on the causal interaction between the neuropeptides, the inflammatory cytokines and insulin. © 1997 John Wiley & Sons, Ltd.