Deficient gamma oscillations in prefrontal cortex (PFC) of individuals with schizophrenia appear to involve impaired inhibitory drive from parvalbumin-expressing interneurons (PVIs). Inhibitory drive from PVIs is regulated, in part, by RNA binding fox-1 homolog 1 (Rbfox1). Rbfox1 is spliced into nuclear or cytoplasmic isoforms, which regulate alternative splicing or stability of their target transcripts, respectively. One major target of cytoplasmic Rbfox1 is vesicle associated membrane protein 1 (Vamp1). Vamp1 mediates GABA release probability from PVIs, and the loss of Rbfox1 reduces Vamp1 levels which in turn impairs cortical inhibition. In this study, we investigated if the Rbfox1-Vamp1 pathway is altered in PVIs in PFC of individuals with schizophrenia by utilizing a novel strategy that combines multi-label in situ hybridization and immunohistochemistry. In the PFC of 20 matched pairs of schizophrenia and comparison subjects, cytoplasmic Rbfox1 protein levels were significantly lower in PVIs in schizophrenia and this deficit was not attributable to potential methodological confounds or schizophrenia-associated co-occurring factors. In a subset of this cohort, Vamp1 mRNA levels in PVIs were also significantly lower in schizophrenia and were predicted by lower cytoplasmic Rbfox1 protein levels across individual PVIs. To investigate the functional impact of Rbfox1-Vamp1 alterations in schizophrenia, we simulated the effect of lower GABA release probability from PVIs on gamma power in a computational model network of pyramidal neurons and PVIs. Our simulations showed that lower GABA release probability reduces gamma power by disrupting network synchrony while minimally affecting network activity. Finally, lower GABA release probability synergistically interacted with lower strength of inhibition from PVIs in schizophrenia to reduce gamma power non-linearly. Together, our findings suggest that the Rbfox1-Vamp1 pathway in PVIs is impaired in schizophrenia and that this alteration likely contributes to deficient PFC gamma power in the illness.