The synaptic hypothesis of schizophrenia has been highly influential. However, new approaches mean there has been a step-change in the evidence available, and some tenets of earlier versions are not supported by recent findings. Here, we review normal synaptic development and evidence from structural and functional imaging and post-mortem studies that this is abnormal in people at risk and with schizophrenia. We then consider the mechanism that could underlie synaptic changes and update the hypothesis. Genome-wide association studies have identified a number of schizophrenia risk variants converging on pathways regulating synaptic elimination, formation and plasticity, including complement factors and microglial-mediated synaptic pruning. Induced pluripotent stem cell studies have demonstrated that patient-derived neurons show pre- and post-synaptic deficits, synaptic signalling alterations, and elevated, complement-dependent elimination of synaptic structures compared to control-derived lines. Preclinical data show that environmental risk factors linked to schizophrenia, such as stress and immune activation, can lead to synapse loss. Longitudinal MRI studies in patients, including in the prodrome, show divergent trajectories in grey matter volume and cortical thickness compared to controls, and PET imaging shows in vivo evidence for lower synaptic density in patients with schizophrenia. Based on this evidence, we propose version III of the synaptic hypothesis. This is a multi-hit model, whereby genetic and/or environmental risk factors render synapses vulnerable to excessive glia-mediated elimination triggered by stress during later neurodevelopment. We propose the loss of synapses disrupts pyramidal neuron function in the cortex to contribute to negative and cognitive symptoms and disinhibits projections to mesostriatal regions to contribute to dopamine overactivity and psychosis. It accounts for the typical onset of schizophrenia in adolescence/early adulthood, its major risk factors, and symptoms, and identifies potential synaptic, microglial and immune targets for treatment.