Cannabis derivatives produce their CNS effect through activation of the endocannabinoid system, a recently discovered signalling system comprising specific receptors, their intrinsic lipid ligands and the associated enzymatic machinery (transporters, biosynthetic and degradative enzymes). This review provides the latest preclinical and clinical breakthroughs on the endocannabinoid system's role in psychotic disorders such as schizophrenia. Data reported so far clearly indicate the presence of a dysregulation in the endocannabinoid system (both in term of cannabinoid receptors and endocannabinoid ligands) in animal models of psychosis as well as in schizophrenic patients. Based on these observations, the pharmacological modulation of the endocannabinoid system has been taken into account as a new therapeutic possibility for psychotic disorders. However, preclinical studies have not provided straightforward results, with both agonists and antagonists exhibiting positive, negative or even no effect. At human level, only cannabidiol, a non psychotropic phytocannabinoid, and the antagonist/inverse agonist rimonabant were tested, however additional controlled trials are required to confirm the therapeutic exploitation of these compounds. Another important aspect in studying the relationship between the endocannabinoid system and schizophrenia is the impact of Cannabis consumption on psychotic disorders, especially when this occurs at vulnerable ages such as adolescence. In fact literature from animal models support adolescence as a highly vulnerable age for the consequences of cannabis exposure on different domains (such as cognition and social behaviour) that are altered in psychotic disorders.