The excitation/inhibition (E/I) balance in the prefrontal cortex (PFC) is a dynamic equilibrium maintained by the concerted efforts of excitatory glutamatergic neurons and inhibitory γ-aminobutyric acid neurons (INs). The medial dorsal nucleus (MD) of the thalamus provides abundant pyramidal glutamatergic neural (PNs) projections to the PFC and regulates the E/I balance within the PFC. In schizophrenia, an imbalance in the E/I ratio in the PFC, along with reduced thalamocortical connectivity, has been observed. Nevertheless, the precise mechanisms underlying the modulation of the MD to PFC activity remain elusive. We posited a hypothesis that the MD may serve as a potential therapeutic target for schizophrenia. To investigate the role of PFC in the pathogenesis of schizophrenia, we induced schizophrenia-related neuronal activation and motor behavioral abnormalities in adult rats through intraperitoneal injection of MK-801. We measured alterations in neuronal firing activity and neural oscillations by monitoring deep brain neuronal signals under resting state and auditory response task conditions, while simultaneously assessing their motor activities. In our study, the results indicated that systemic administration of MK-801 preferentially leads to an increase in the firing frequency of PFC-PNs and disrupts the E/I balance in the PFC. Concurrently, this is accompanied by mid-to-high (14-80 and 130-180 Hz) frequency oscillations and abnormalities in the auditory steady-state responses and autonomous activities. Subsequently, we employed optogenetics to stimulate the activity of MD neurons selectively, aiming to elucidate the role of the MD-to-PFC neural circuit in modulating the PFC E/I ratio. The results confirmed thatincreased activity of MD neurons in schizophrenia leads to heightened excitability of PFC-INs and decreased firing rates of PFC-PNs, thereby restoring the E/I balance in the PFC and improving gamma oscillations, auditory steady-state responses, and behavioral abnormalities. Overall, these findings reveal the pivotal role of MD-to-PFC connectivity in modulating PFC E/I balance and provide valuable insights for potential therapeutic strategies targeting this circuitry in the context of E/I dysregulation seen in schizophrenia.