The revised dopamine (DA) hypothesis states that clinical symptoms of schizophrenia are caused by an imbalance of the DA system. In this article, we aim to review evidence for this hypothesis by evaluating functional magnetic resonance imaging studies in schizophrenia. Because atypical drugs are thought to have a normalizing effect on DA neurotransmission, we have focused on pharmacological MRI (PhMRI) studies that explore the effect of these drugs on prefrontal and striatal brain activity in schizophrenia patients. We encountered a total of 13 studies, most of which reported enhanced prefrontal activity associated with alleviation of negative symptoms and improvement of cognitive functions, following treatment with atypical antipsychotics. Besides increasing prefrontal cortex activity, atypical antipsychotics have also shown to be effective in the regulation of striatal functioning. The current PhMRI findings support the revised DA hypothesis of schizophrenia by confirming hypoactivity of the prefrontal cortex in schizophrenia and, following atypical antipsychotics, improvement of prefrontal and subcortical functions reflecting enhanced DA activity.