Glycine N-methyltransferase (GNMT) affects cellular methylation capacity through regulating the ratio between S-adenosylmethionine (SAM) and S-adenosylhomocysteine (SAH). The product of its enzymatic reaction—sarcosine has antipsychotic effect in patients with schizophrenia. In this study, through RT-PCR and immunohistochemical staining, we demonstrated that GNMT expressed in various neurons located in the cerebral cortex, hippocampus, substantia nigra and cerebellum. Compared to the wild-type mice, Gnmt−/− mice had significantly lower level of sarcosine in the cerebral cortex. Real-time PCR identified genes involved in the methionine metabolism (Dnmt1 and Dnmt3a), ErbB (Nrg1 and ErbB4) and mTOR (Akt2, S6, S6k1 and S6k2) signaling pathways were dysregulated significantly in the cortex of Gnmt−/− mice. Acoustic startle reflex test demonstrated that Gnmt−/− mice had significantly lower level of prepulse inhibition and the deficit was ameliorated through clozapine or sarcosine treatment. Furthermore, liver-specific-human-GNMT transgenic with Gnmt−/− (Tg-GNMT/Gnmt−/−) mice were used to rule out that the phenotype was due to abnormal liver function. In summary, the neuropsychological abnormalities found in Gnmt−/− mice may represent an endophenotype of schizophrenia. GNMT plays an important role in maintaining normal physiological function of brain and Tg-GNMT/Gnmt−/− mice are useful models for development of therapeutics for patients with schizophrenia.