The local recurrent collateral connections between cortical neurons provide a basis for attractor neural networks for memory, attention, decision-making, and thereby for many aspects of human behavior. In schizophrenia, a reduction of the firing rates of cortical neurons, caused for example by reduced NMDA receptor function or reduced spines on neurons, can lead to instability of the high firing rate attractor states that normally implement short-term memory and attention in the prefrontal cortex, contributing to the cognitive symptoms. Reduced NMDA receptor function in the orbitofrontal cortex by reducing firing rates may produce negative symptoms, by reducing reward, motivation, and emotion. Reduced functional connectivity between some brain regions increases the temporal variability of the functional connectivity, contributing to the reduced stability and more loosely associative thoughts. Further, the forward projections have decreased functional connectivity relative to the back projections in schizophrenia, and this may reduce the effects of external bottom-up inputs from the world relative to internal top-down thought processes. Reduced cortical inhibition, caused by a reduction of GABA neurotransmission, can lead to instability of the spontaneous firing states of cortical networks, leading to a noise-induced jump to a high firing rate attractor state even in the absence of external inputs, contributing to the positive symptoms of schizophrenia. In depression, the lateral orbitofrontal cortex non-reward attractor network system is over-connected and has increased sensitivity to non-reward, providing a new approach to understanding depression. This is complemented by under-sensitivity and under-connectedness of the medial orbitofrontal cortex reward system in depression.