Single nucleotide polymorphisms (SNPs) in TCF7L2 gene have shown an increase in susceptibility to schizophrenia in Arab, European and Chinese Han populations. In the Chinese Han population, SNP rs12573128 in TCF7L2 is the variant that was associated with an increase in schizophrenia risk. This marker is used as a pre-diagnostic marker for schizophrenia. TCF7L2 has also been reported as a risk gene in autism spectrum disorder and has been linked to it in recent large-scale genetic studies.
The mechanism behind TCF7L2s involvement in the emergence of neurodevelopmental disorders is not fully understood, as there have been few studies characterizing its role in brain development in detail. It was shown that during embryogenesis TCF7L2 is involved in the development of fish-specific habenula asymmetry in Danio rerio, and that the dominant negative TCF7L2 isoform influences cephalic separation in the embryo by inhibiting the posteriorizing effect of the Wnt pathway. It was also shown that in Tcf7l2' knockout mice the number of proliferating cells in cortical neural progenitor cells is reduced. In contrast, no such effect was found in the midbrain.
More recently it was shown that TCF7L2 plays a crucial role in both the embryonic development and postnatal maturation of the thalamus through direct and indirect regulation of many genes previously reported to be important for both processes. In late gestation TCF7L2 regulates the expression of many thalamus-enriched transcription factors (e.g. Foxp2, Rora, Mef2a, Lef1, Prox1), axon guidance molecules (e.g. Epha1, Epha4, Ntng1, Epha8) and cell adhesion molecules (e.g. Cdh6, Cdh8, Cdhr1). Accordingly, a total knockout of Tcf7l2 in mice leads to improper growth of thalamocortical axons, changed anatomy and improper sorting of the cells in the thalamo-habenular region. In the early postnaral period TCF7L2 starts to regulate the expression of many genes necessary for the acquisition of characteristic excitability patterns in the thalamus, mainly ion channels, neurotransmitters and their receptors and synaptic vescicle proteins (e.g. Cacna1g, Kcnc2, Slc17a7, Grin2b), and an early postnatal knockout of Tcf7l2 in mouse thalamus leads to significant reduction in the number and frequency of action potentials generated by the thalamocortical neurons. The mechanism that leads to the change in TCF7L2 target genes between gestation and early postnatal period is unknown. It is likely that a perinatal change in the proportion of TCF7L2 isoforms expressed in the thalamus is partially responsible. Abnormalities in the anatomy of the thalamus and the activity of its connections to the cerebral cortex are frequently detected in patients with schizophrenia  and autism. Such abnormalities could arise from developmental aberrations in patients with unfavorable mutations of TCF7L2, further strengthening the link between TCF7L2 and neurodevelopmental disorders.