Environmental factors have been associated with psychiatric disorders and recent epidemiological studies suggest an association between prenatal lead (Pb(2+)) exposure and schizophrenia (SZ). Pb(2+) is a potent antagonist of the N-methyl-D-aspartate receptor (NMDAR) and converging evidence indicates that NMDAR hypofunction has a key role in the pathophysiology of SZ. The glutamatergic hypothesis of SZ posits that NMDAR hypofunction results in the loss of parvalbumin (PV)-positive GABAergic interneurons (PVGI) in the brain. Loss of PVGI inhibitory control to pyramidal cells alters the excitatory drive to midbrain dopamine neurons increasing subcortical dopaminergic activity. We hypothesized that if Pb(2+) exposure in early life is an environmental risk factor for SZ, it should recapitulate the loss of PVGI and reproduce subcortical dopaminergic hyperactivity. We report that on postnatal day 50 (PN50), adolescence rats chronically exposed to Pb(2+) from gestation through adolescence exhibit loss of PVGI in SZ-relevant brain regions. PV and glutamic acid decarboxylase 67 kDa (GAD67) protein were significantly decreased in Pb(2+) exposed rats with no apparent change in calretinin or calbindin protein levels suggesting a selective effect on the PV phenotype of GABAergic interneurons. We also show that Pb(2+) animals exhibit a heightened locomotor response to cocaine and express significantly higher levels of dopamine metabolites and D2-dopamine receptors relative to controls indicative of subcortical dopaminergic hyperactivity. Our results show that developmental Pb(2+) exposure reproduces specific neuropathology and functional dopamine system changes present in SZ. We propose that exposure to environmental toxins that produce NMDAR hypofunction during critical periods of brain development may contribute significantly to the etiology of mental disorders.