D-amino acid oxidase (DAO) is a flavoenzyme that metabolizes certain D-amino acids, notably the endogenous N-methyl D-aspartate receptor (NMDAR) co-agonist, D-serine. As such, it has the potential to modulate the function of NMDAR and to contribute to the widely hypothesized involvement of NMDAR signalling in schizophrenia. Three lines of evidence now provide support for this possibility: DAO shows genetic associations with the disorder in several, although not all, studies; the expression and activity of DAO are increased in schizophrenia; and DAO inactivation in rodents produces behavioural and biochemical effects, suggestive of potential therapeutic benefits. However, several key issues remain unclear. These include the regional, cellular and subcellular localization of DAO, the physiological importance of DAO and its substrates other than D-serine, as well as the causes and consequences of elevated DAO in schizophrenia. Herein, we critically review the neurobiology of DAO, its involvement in schizophrenia, and the therapeutic value of DAO inhibition. This review also highlights issues that have a broader relevance beyond DAO itself: how should we weigh up convergent and cumulatively impressive, but individually inconclusive, pieces of evidence regarding the role that a given gene may have in the aetiology, pathophysiology and pharmacotherapy of schizophrenia?