Clinical trials show that the drugs codenamed LY2140023, produced by Eli Lilly researchers in Indianapolis, Indiana, are as effective as olanzapine, the best currently available drug.
Schizophrenia has a wide range of debilitating symptoms that includes delusions, hallucination, disordered thinking, social withdrawal and emotional 'flatness'.
Current anti-schizophrenia drugs operate in a similar way by cutting down levels of neurotransmitter dopamine in the brain.
However, the drugs do not control the condition in all people and lead to unpleasant side effects.
The new drug is changed in the body into a second compound, called LY404023, which acts by slowing down the activity of a different neurotransmitter, glutamate.
"Our study is the first conclusive evidence for a role of glutamate in the pathophysiology of schizophrenia," Nature quoted James Monn, one of the research team, as saying.
In the trial, 196 schizophrenic patients were administered with LY2140023, olanzapine or a placebo for four weeks. The drugs were roughly equally effective.
"In terms of drug development this is a giant step forward pretty much the first major step forward since 1952, when chlorpromazine was introduced," Solomon Snyder, a neuropharmacologist at Johns Hopkins University in Baltimore, Maryland said.
The side effects of LY2140023 did not cause weight gain like other current antipsychotic drugs.
Researchers observed the possibility that glutamate system might be involved in schizophrenia, when the drug party drug phencyclidine triggered a temporary psychosis alike to the disease.
Though Monn admits that it is unknown how the new drug causes its antipsychotic actions, it is bio chemically a subtly reaction and operates on on a particular glutamate receptor called mGlu2/3.
The receptor has a feedback loop that works only when the glutamate system is very active.