Dysregulation of the dopamine system is central to many models of the pathophysiology of psychosis in schizophrenia. However, emerging evidence suggests that this dysregulation is driven by the disruption of upstream circuits that provide afferent control of midbrain dopamine neurons. Furthermore, stress can profoundly disrupt this regulatory circuit, particularly when it is presented at critical vulnerable prepubertal time points. This review will discuss the dopamine system and the circuits that regulate it, focusing on the hippocampus, medial prefrontal cortex, thalamic nuclei, and medial septum, and the impact of stress. A greater understanding of the regulation of the dopamine system and its disruption in schizophrenia may provide a more complete neurobiological framework to interpret clinical findings and develop novel treatments.