Several lines of evidence have established the presence of an association between a 3-Mb deletion in chromosome 22q11 and schizophrenia. In this paper we present a complete high-density SNP scan of this segment using DNA pools, and demonstrate significant association between two distinct regions and schizophrenia in an Ashkenazi Jewish population. One of these regions contains the previously identified COMT gene. The pattern of association and linkage disequilibrium (LD) in the second region suggest that DGCR2, which encodes a putative adhesion receptor protein, is the susceptibility gene. We confirmed the association between DGCR2 and schizophrenia through individual genotyping of 1,400 subjects. In a gene expression analysis the risk allele of a coding SNP associated with schizophrenia was found to be associated with a reduced expression of DGCR2. Interestingly, the expression of DGCR2 was also found to be elevated in the dorsolateral prefrontal cortex of schizophrenic patients relative to matched controls. This increase is likely to be explained by exposure to antipsychotic drugs. To test that hypothesis, we looked at rats exposed to antipsychotic medication and found significantly elevated levels of DGCR2 transcripts. The genetic and functional evidences here reported suggest a possible role of the DGCR2 gene in the pathology of schizophrenia and also in the therapeutic effects of antipsychotic drugs.