This paper deals with nicotinic receptor abnormalities of hippocampus in schizophrenia. It reviews genetic, electrophysiologic and anatomical studies and possible therapeutic use of such findings. Short summation of hippocampal physiology and functional anatomy is presented. In schizophrenia there is a defect of information processing--sensory gating, a function under nicotinic control. Role of cholinergic enhancement in the treatment of schizophrenia is also mentioned.