Abnormalities in brain plasticity, including abnormal information processing by disturbed cortical inhibition and facilitation in schizophrenia, have been described several times in the past. Transcranial magnetic stimulation (TMS) provides a neurophysiological technique for the measurement of cortical excitability, especially of the motoneural system. With TMS it is possible to explore important aspects of the pathophysiological mechanisms underlying schizophrenia using recently developed paradigms (paired pulse method, cortical silent period). This review summarizes the results of available diagnostic TMS studies in schizophrenia. Studies investigating the efficacy of therapeutic repetitive magnetic stimulation in patients with treatment resistant hallucinations or predominantly negative symptoms were not considered. The reviewed studies support the assumption of reduced cortical inhibition, probably caused by GABAergic deficit, in schizophrenia. Factors influencing the study results, the limitations of this promising technique in schizophrenia, and further research options are discussed.