The dopamine system has been a subject of intense investigation due to its role in a number of normal functions and its disruption in pathological conditions. Thus, the dopamine system has been shown to play a major role in cognitive, affective, and motor functions, and its disruption has been proposed to underlie the pathophysiology of several major psychiatric and neurological disorders, including schizophrenia, Parkinson's disease, drug abuse, and attention deficit/hyperactivity disorder. Although these studies have continued to define the basic functional principles of the dopamine system in the mammalian brain, we are still at the initial stages in unraveling the complex role of this transmitter system in regulating behavioral processes. Accumulating evidence suggests that dopamine modulates excitatory and inhibitory neurotransmission, and moreover affects synaptic plasticity induced within the circuits of its target brain regions. It is this role in synaptic plasticity that has associated the dopamine system with aspects of cognitive function involving learning and memory. In this chapter, we summarize recent findings relevant to the role of the dopamine system in psychiatric disorders at cellular, anatomical, and functional levels. In particular, we will focus on the regulation of dopamine neuron activity states and how this impacts dopamine release in cortical and subcortical systems, and the physiological and behavioral impact of dopamine receptor stimulation in the postsynaptic targets of these neurons. A brief summary of recent findings regarding the development and maturation of DA system and how this relates to the pathophysiology of psychiatric disorders are given, and finally models of dopamine system disruption in schizophrenia and how therapeutic approaches impact on dopamine system dynamics is presented.