One of the core deficits that characterizes schizophrenia is an increase in distractibility and disinhibition at all levels of information processing. Patients with schizophrenia seem unable to focus attention on the relevant events while ignoring the irrelevant stimuli. This pattern of behavior is also observed in unmedicated schizotypal individuals who may carry liability for schizophrenia. In this review, we focus on studies of attentional inhibition, as assessed by the negative priming paradigm, to elucidate the relationships among deficits in inhibition, clinical symptoms and medication effects. We then consider models of the etiology of deficits in negative priming in schizophrenia and schizotypal personality. Finally, we discuss the potential power of utilizing hypothesis-driven cognitive paradigms in psychiatric research.