Ionotropic AMPA and NMDA glutamate receptors are ligand-gated ion channels that mediate fast synaptic transmission in the brain and play a crucial role in learning and memory. Dysfunction of these receptors is believed to be associated with a number of neuropsychiatric disorders, including schizophrenia. As direct activation of these ionotropic receptors can lead to excitoxicity, allosteric modulation of these receptors could minimize side-effects to achieve better therapeutic efficacy. Our review here focuses on the allosteric modulation of the NMDA receptor. Endogenous glycine and d-serine both act as co-agonists on the strychnine-insensitive GlyB site on the NMDA receptor, and along with glutamate, co-activate the NMDA receptor. Forebrain synaptic glycine and d-serine levels are regulated by the Glycine Transporter-1 (GlyT1) and the arginine–serine–cysteine transporter-1 (Asc-1), respectively; in addition to d-serine metabolism by d-Amino Acid Oxidase (DAAO). Together, these processes prevent the GlyB site from being saturated by the high extracellular levels of brain glycine, and perhaps d-serine, in vivo. Blockade of NMDA receptors by phencyclidine induces schizophrenia-like symptoms with the associated cognitive deficits. It was proposed that: a) blockade of GlyT1 mediated reuptake of glycine, or b) inhibition of d-amino Acid Oxidase, or Asc-1 will elevate brain glycine, and d-serine to upregulate NMDA receptor functions via glycine and d-serine co-agonistic allosteric modulation of the GlyB sites on the NMDA receptor. These approaches may provide novel treatments to schizophrenia, provided that some of the known adverse effects associated with existing GlyT1 agents can be safely and adequately dealt with.