Newer atypical antipsychotic drugs such as risperidone, olanzapine, quetiapine, ziprasidone and aripiprazole that have been modelled on the prototype agent clozapine and developed since the 1990s are now referred to as second-generation antipsychotic drugs (SGAs). It has been proposed that the interaction between serotonin (5-HT) and dopamine systems may play a critical role in the mechanism of action of atypical antipsychotic drugs because a relatively potent blockade of 5-HT2A receptors coupled with the weaker antagonism of the dopamine D2 receptors is found to be the only pharmacological feature which most atypical antipsychotic drugs have in common. This so-called 'serotonin-dopamine hypothesis' has become a useful model for developing new SGAs to achieve superior antipsychotic efficacy with a lower incidence of extrapyramidal side effects compared to those with first-generation antipsychotic drugs (FGAs) such as haloperidol and chlorpromazine, although it has not been validated yet. In contrast, it has been proposed as the alternative 'fast-off' theory according to which atypical profile of SGAs can be determined by the loose D2-binding kinetics alone, while the blockade of the 5-HT2A receptor may be neither necessary nor sufficient. This chapter reviews the current issues on the serotonin-dopamine hypothesis together with further advances in research on the role of 5-HT receptor subtypes in the mechanism of action for SGAs. In particular, SGA-induced dopamine release in the prefrontal cortex, possibly through the functional activation of 5-HT1A receptors by 5-HT2A and D2 receptor-mediated interaction, has been thought to be the basis for the neurocognitive effects of these drugs on schizophrenia. Thus, the novel antipsychotic aripiprazole may not only be a simply partial D2 agonist but also a significant 5-HT1A agonist and 5-HT2A antagonist. These complex properties of antipsychotic aripiprazole may contribute to dopaminergic activation of the local circuitry in the prefrontal cortex of schizophrenic patients.