Sex differences appear to be an important factor in schizophrenia. Women with schizophrenia tend to exhibit less disease impairment than men, typically presenting with a later age-at-onset, lower overall incidence and less severe symptoms. These observations underpin the estrogen hypothesis of schizophrenia, which postulates a protective role of estrogen against the development and severity of the disorder. While there has been significant attention placed on the impact of estrogens in schizophrenia, less consideration has been afforded to the role of progesterone, the other main female gonadal hormone. This narrative review discusses the role of progesterone as a neuroactive steroid and how it may be dysregulated in schizophrenia. Preclinical and molecular studies relevant to schizophrenia are discussed with a particular focus on the interactions between progesterone and the dopaminergic system. Notably, existing data on progesterone in relation to schizophrenia is inconsistent, with some studies suggesting a neuroprotective role for the hormone (e.g. animal models of cognitive dysfunction and positive symptoms), while other studies posit a disruptive impact of the hormone (e.g. negative correlations with symptom modulation in patients). This review aims to thoroughly address these discrepancies, concluding that altogether the data suggest that progesterone is a key modulator of central systems implicated in schizophrenia. On this basis, we argue that a more inclusive, considered effort of future studies to understand the intricacies of the interactions between progesterone and estrogen. Such an effort may enhance our understanding of the roles of sex hormones in schizophrenia, thus leading to avenues for novel therapeutic approaches.