Cognitive deficits, including impairments in working memory that have been linked to the prefrontal cortex, are among the most debilitating and difficult to treat features of schizophrenia. Consequently, the identification of potential targets informed by the pathophysiology of the illness is needed to develop novel pharmacological approaches for ameliorating these deficits. Postmortem studies of the prefrontal cortex in schizophrenia subjects have revealed disturbances restricted to a subpopulation of inhibitory neurons that includes chandelier neurons, whose axon terminals synapse on the axon initial segment of pyramidal neurons. Chandelier neurons play an important role in synchronizing pyramidal neuron activity and appear to be a critical component of the prefrontal cortical circuitry that subserves working memory function. Therefore, in this paper we review evidence suggesting that drugs which selectively enhance chandelier neuron-mediated inhibition of prefrontal pyramidal neurons may improve working memory dysfunction in schizophrenia. Potential novel targets for such agents include GABAA receptors that contain the α2 subunit. In addition, we discuss potential complementary mechanisms for enhancing inhibitory input to pyramidal cell bodies, including drugs with activity at the CB1 receptor of the endocannabinoid system. The development of pathophysiologically-based treatments that selectively remediate disturbances in specific neural circuits underlying working memory may provide an effective approach to improving cognitive deficits in schizophrenia.