Current drug-based therapy for schizophrenia, a disorder of brain function, is only moderately successful and has changed minimally over the past 40 years. This situation has arisen because of our limited understanding of the links between brain activity and psychological-level symptoms and how this knowledge is incorporated into our current preclinical models of the disorder. Here we aim to bridge this gap by examining a specific brain mechanism that appears to underlie the sequential encoding of information in the hippocampus. We propose that a disturbance in this mechanism underlies the disorganized thought symptoms observed in schizophrenia. This brain mechanism is ideally situated for use as a biomarker for preclinical drug testing and screening. We will, therefore, examine the responses to current known antipsychotics in preclinical models of schizophrenia, and then use our knowledge of this system to test novel drugs for their putative therapeutic potential in reorganizing neural activity.