Trials of novel compounds for the treatment of schizophrenia are typically tested in patients following brief withdrawal of ongoing medication despite known long-term changes in the dopamine (DA) system following chronic antipsychotic drug therapy. The present study explored the impact of withdrawal from repeated haloperidol (HAL) treatment, as well as the response to a novel α5 gamma-aminobutyric acid (GABA(A)) receptor positive allosteric modulator (α5PAM), on the activity of the DA system in the methylazoxymethanol acetate (MAM) neurodevelopmental model of schizophrenia. Electrophysiological recordings were conducted from DA neurons in the ventral tegmental area of MAM and saline (SAL) rats following 7-day withdrawal from repeated HAL (21 d, 0.6 mg/kg, orally). In separate animals, amphetamine-induced locomotion was measured to assess changes in DA behavioral sensitivity. SAL rats withdrawn from HAL demonstrated reduced spontaneous DA neuron activity along with an enhanced locomotor response to amphetamine, indicative of the development of DA supersensitivity. Both α5PAM treatment and ventral hippocampal (vHPC) inactivation reversed the DA neuron depolarization block following HAL withdrawal in SAL rats. In contrast, MAM rats withdrawn from HAL exhibited reduced spontaneous DA activity and enhanced locomotor response to amphetamine compared with untreated SAL rats; however, this condition was unresponsive to α5PAM treatment or vHPC inactivation. Withdrawal from prior HAL treatment interferes with the therapeutic actions of this novel treatment in the MAM model of schizophrenia. Consequently, testing novel compounds on chronically treated schizophrenia patients may be ineffective.