beta-Site APP-cleaving enzyme 1 (BACE1) is required for the penultimate cleavage of the amyloid-beta precursor protein (APP) leading to the generation of amyloid-beta peptides that is central to the pathogenesis of Alzheimer's disease. In addition to its role in endoproteolysis of APP, BACE1 participates in the proteolytic processing of neuregulin 1 (NRG1) and influences the myelination of central and peripheral axons. Although NRG1 has been genetically linked to schizophrenia and NRG1(+/-) mice exhibit a number of schizophrenia-like behavioral traits, it is not known whether altered BACE1-dependent NRG1 signaling can cause similar behavioral abnormalities. To test this hypothesis, we analyze the behaviors considered to be rodent analogs of clinical features of schizophrenia in BACE1(-/-) mice with impaired processing of NRG1. We demonstrate that BACE1(-/-) mice exhibit deficits in prepulse inhibition, novelty-induced hyperactivity, hypersensitivity to a glutamatergic psychostimulant (MK-801), cognitive impairments, and deficits in social recognition. Importantly, some of these manifestations were responsive to treatment with clozapine, an atypical antipsychotic drug. Moreover, although the total amount of ErbB4, a receptor for NRG1 was not changed, binding of ErbB4 with postsynaptic density protein 95 (PSD95) was significantly reduced in the brains of BACE1(-/-) mice. Consistent with the role of ErbB4 in spine morphology and synaptic function, BACE1(-/-) mice displayed reduced spine density in hippocampal pyramidal neurons. Collectively, our findings suggest that alterations in BACE1-dependent NRG1/ErbB4 signaling may participate in the pathogenesis of schizophrenia and related psychiatric disorders.