Schizophrenia is a spectrum of neuropsychiatric deformities, characterized by hallucination, delusion, mood disorders, speech pathology, and neurocognitive deficits. Among various clinical manifestations, hallucination has been recognized as a core psychotic symptom that occurs more frequently in schizophrenia. A significant number of subjects with neurocognitive disorders like Alzheimer’s disease (AD), Parkinson’s disease (PD), Huntington’s disease (HD), and other neurological diseases like stroke and epileptic seizure also experience hallucinations. While aberrant neurotransmission has been linked to the neuropathogenic events of schizophrenia, the specific cellular mechanism contributing to hallucinations remains ambiguous. Neurodegeneration in the hippocampus of the brain has been identified as a predominant pathogenic determinant of dementia. While the scientific proof for the neurodegeneration in schizophrenia is limited, the occurrence of dementia in schizophrenia has become increasingly evident. To note, both neurodegenerative, neurodevelopmental, and neuropsychiatric disorders display impaired neurogenesis in the brain. Impaired neurogenesis in the hippocampus has been linked to dementia and mood disorders. Notably, the early phase of many neurodegenerative disorders has been characterized by reactive neuroblostosis and aberrant cell cycle activation in mature neurons leading to the fluctuation in neurogenic processes leading to abnormal synaptogenesis and neurotransmission in the brain. Thus, this article emphasizes a hypothesis that aberrant neurogenic processes could be an underlying mechanism of hallucination in schizophrenia and other neurological diseases.