Neuropeptide S (NPS) and its cognate receptor were reported to mediate anxiolytic-like and arousal effects. NPS receptors are predominantly expressed in the brain, especially in limbic structures, including amygdala, olfactory nucleus, subiculum and retrosplenial cortex. In contrast, the NPS precursor is expressed in only a few brainstem nuclei where it is co-expressed with various excitatory transmitters, including glutamate. The current study investigates interactions of the NPS system with glutamatergic neurotransmission. It has been suggested that dysfunctions in glutamatergic neurotransmission via N-methyl-D-aspartate (NMDA) receptors might be involved in the pathophysiology of schizophrenia since NMDA receptor antagonists, such as MK-801, have been shown to induce psychotic-like behavior in humans and animal models. Also, MK-801 is known to produce histological changes such as cytoplasmic vacuoles in retrosplenial cortex neurons where NPS receptors are highly expressed. In this study we show that NPS is able to alleviate neuropathological, neurochemical and behavioral changes produced by NMDA receptor antagonists. NPS treatment attenuated MK-801-induced vacuolization in the rat retrosplenial cortex in a dose-dependent manner that can be blocked by an NPS receptor-selective antagonist. NPS also suppressed MK-801-induced increases of extracellular acetylcholine levels in the retrosplenial cortex. In the prepulse inhibition (PPI) assay, animals pretreated with NPS recovered significantly from MK-801-induced disruption of PPI. Our study suggests that NPS may have protective effects against the neurotoxic and behavioral changes produced by NMDA receptor antagonists and that NPS receptor agonists may elicit antipsychotic effects.