The prefrontal cortex of the primate frontal lobes provides the capacity for judgment which can constantly adapt behavior in order to optimize its outcome. Adjudicating between long-term memory programs and prepotent responses, this capacity reviews all incoming information and provides an interpretation dependent on the events that have just occurred, the events that are predicted to happen, and the alternative response strategies that are available in the given situation. It has been theorized that this function requires two essential integrated components, a central executive which guides selective attention based on mechanisms of associative memory, as well as the second component, working memory buffers, in which information is held online, abstracted, and translated on a mental sketchpad of work in progress. In this review, we critically outline the evidence that the integration of these processes and, in particular, the induction and maintenance of persistent activity in prefrontal cortex and related networks, is dependent upon the interaction of dopamine D1 and glutamate NMDA receptor signaling at critical nodes within local circuits and distributed networks. We argue that this interaction is not only essential for representational memory, but also core to mechanisms of neuroadaptation and learning. Understanding its functional significance promises to reveal major new insights into prefrontal dysfunction in schizophrenia and, hence, to target a new generation of drugs designed to ameliorate the debilitating working memory deficits in this disorder.