A theory is proposed that explains a broad range of clinical manifestations in schizophrenia. It is a heuristic device for organizing research in the neuroimmunology and virology of schizophrenia. This approach is different from other immune and viral theories of schizophrenia and defines testable hypotheses for further theory refinement or rejection. Defective alpha-interferon (aIFN) regulation resulting in excessive effect is postulated to cause schizophrenia. The role of aIFN in the regulation of development and its induction within the brain by the reactivation of viruses that are commonly present in the normal central nervous system (CNS) are the primary pathophysiological mechanisms. Biological properties of aIFN include neural excitation, opiate and adrenocorticotropic hormone activity, and inhibition of cellular proliferation and differentiation. Psychosis results from in situ viral stimulation of aIFN production in the CNS of a vulnerable host having defective regulation of either sensitivity or production. Negative symptoms result from aIFN effects on CNS development and the behavioral toxicity of aIFN. Biological developmental abnormalities, gender differences in severity, and decline in psychotic symptoms with age are discussed in the context of the theory. Research strategies and specific testable hypotheses are presented.