Based on the neuromodulatory and homeostatic actions of adenosine, adenosine dysfunction may contribute to the neurobiological and clinical features of schizophrenia. The present model of adenosine dysfunction in schizophrenia takes into consideration the dopamine and glutamate hypotheses, since adenosine exerts neuromodulatory roles on these systems, and proposes that adenosine plays a role in the inhibitory deficit found in schizophrenia. Given the role of adenosine activation of adenosine A1 receptor (A1R) in mediating neurotoxicity in early stages of brain development, pre- and peri-natal complications leading to excessive adenosine release could induce primary brain changes (i.e., first hit). These events would lead to an adenosine inhibitory deficit through a partial loss of A1R that may emerge as reduced control of dopamine activity and increased vulnerability to excitotoxic glutamate action in the mature brain (i.e., second hit). Adenosine dysfunction is reasonably compatible with symptoms, gray and white matter abnormalities, progressive brain loss, pre- and peri-natal risk factors, age of onset, response to current treatments, impaired sensory gating and increased smoking in schizophrenia. Pharmacological treatments enhancing adenosine activity could be effective for symptom control and for alleviating deterioration in the course of the illness. Accordingly, allopurinol, which may indirectly increase adenosine, has been effective and well tolerated in the treatment of schizophrenia. Since much of the evidence for the adenosine hypothesis is preliminary and theoretical, further investigation in the field is warranted.