Trace amine-associated receptor 1 (TAAR1) has emerged as a promising therapeutic target for neuropsychiatric disorders due to its ability to modulate monoaminergic and glutamatergic neurotransmission. In particular, agonist compounds have generated interest as potential treatments for schizophrenia and other psychoses due to TAAR1-mediated regulation of dopaminergic tone. Here, we review unmet needs in schizophrenia, the current state of knowledge in TAAR1 circuit biology and neuropharmacology, including preclinical behavioral, imaging, and cellular evidence in glutamatergic, dopaminergic and genetic models linked to the pathophysiology of psychotic, negative and cognitive symptoms. Clinical trial data for TAAR1 drug candidates are reviewed and contrasted with antipsychotics. The identification of endogenous TAAR1 ligands and subsequent development of small-molecule agonists has revealed antipsychotic-, anxiolytic-, and antidepressant-like properties, as well as pro-cognitive and REM-sleep suppressing effects of TAAR1 activation in rodents and non-human primates. Ulotaront, the first TAAR1 agonist to progress to randomized controlled clinical trials, has demonstrated efficacy in the treatment of schizophrenia, while another, ralmitaront, is currently being evaluated in clinical trials in schizophrenia. Coupled with the preclinical findings, this provides a rationale for further investigation and development of this new pharmacological class for the treatment of schizophrenia and other psychiatric disorders.