Evidence is growing that schizophrenic patients show significant structural damage in the temporal lobe limbic system. We review event-related potentials abnormalities (ERPs) in schizophrenia that may be related to dysfunction in this brain region or its inputs; ERPs discussed include the N100/P200, P300 and N400 components. Additional CT and clinical data have led our laboratory to a unifying working hypothesis of the presence of temporal lobe damage in schizophrenics that is evinced electrophysiologically as ERP alterations, structurally as tissue loss/derangement, and clinically as positive symptoms. The final section of this paper presents a new model of at least one form of schizophrenic pathology that, while speculative, incorporates experimentally based data from both our ERP work and from basic cellular physiology and pharmacology. The model proposes that positive symptoms of schizophrenia are related to limbic system pathology and in particular to a dysregulation of the NMDA form of excitatory amino acid transmission, potentiated by stress, and leading to cell damage and death due to 'excitotoxicity'.