Schizophrenia, a debilitating illness affecting 0.5-1% of the world's population, is characterized by positive, negative and cognitive symptoms. The latter are the best predictor of functional outcome, though largely untreated by current pharmacotherapy; thus a better understanding of the mechanisms underlying cognitive deficits in schizophrenia is crucial. Higher order cognitive processes, such as working memory, are associated with θ (4-7 Hz) and γ (30-80 Hz) oscillations in the prefrontal cortex (PFC), and subjects with schizophrenia exhibit working memory impairments and reduced cortical θ and γ band power. Cortical θ and γ oscillations are dependent on perisomatic inhibition of pyramidal neurons from basket cells expressing cholecystokinin (CCK(b) cells) and parvalbumin (PV(b) cells), respectively. Thus, alterations in basket cells may underlie the cortical oscillation deficits and working memory impairments in schizophrenia. Recent findings from postmortem studies suggest that schizophrenia is associated with multiple molecular alterations that regulate signalling from CCK(b) and PV(b) cells. These alterations include lower CCK and cannabinoid 1 receptor (CB1R) in CCK(b) cells, and lower glutamic acid decarboxylase 67 (GAD67) and increased μ opioid receptor (μOR) in PV(b) cells, as well as lower GABA(A) receptor α1 subunit in pyramidal neurons postsynaptic to PV(b) cells. These changes are thought to lead to increased and decreased strength, respectively, of CCK(b) and PV(b) cell-mediated inhibition of postsynaptic pyramidal cells. Therefore, a convergence of evidence suggests a substantial shift in the relative strengths of PFC pyramidal cell inhibition from CCK(b) and PV(b) cells that may underlie cortical oscillation deficits and working memory impairments in schizophrenia.