Schizophrenia is a debilitating disorder affecting young adults displaying symptoms of cognitive impairment, anxiety, and early social isolation prior to episodes of auditory hallucinations. Cannabis use has been tied to schizophrenia-like symptoms, indicating that dysregulated endogenous cannabinoid signaling may be causally linked to schizophrenia. Previously, we reported that glutamatergic neuron-selective ablation of Lmo4, an endogenous inhibitor of the tyrosine phosphatase PTP1B, impairs endocannabinoid (eCB) production from the metabotropic glutamate receptor mGluR5. These Lmo4-deficient mice display anxiety-like behaviors that are alleviated by local shRNA knockdown or pharmacological inhibition of PTP1B that restores mGluR5-dependent eCB production in the amygdala. Here, we report that these Lmo4-deficient mice also display schizophrenia-like behaviors: impaired working memory assessed in the Y maze and defective sensory gating by prepulse inhibition of the acoustic startle response. Modulation of inhibitory inputs onto layer 2/3 pyramidal neurons of the prefrontal cortex relies on eCB signaling from the brain-derived neurotrophic factor receptor trkB, rather than mGluR5, and this mechanism was defective in Lmo4-deficient mice. Genetic ablation of PTP1B in the glutamatergic neurons lacking Lmo4 restored tyrosine phosphorylation of trkB, trkB-mediated eCB signaling, and ameliorated schizophrenia-like behaviors. Pharmacological inhibition of PTP1B with trodusquemine also restored trkB phosphorylation and improved schizophrenia-like behaviors by restoring eCB signaling, since the CB1 receptor antagonist 1-(2,4-dichlorophenyl)-5-(4-iodophenyl)-4-methyl-N-1-piperidinyl-1H-pyrazole-3-carboxamide blocked this effect. Thus, activation of PTP1B in pyramidal neurons contributes to schizophrenia-like behaviors in Lmo4-deficient mice and genetic or pharmacological intervention targeting PTP1B ameliorates schizophrenia-related deficits.