Disrupted-in-schizophrenia 1 (DISC1) is a mental illness gene first identified in a Scottish pedigree. So far, DISC1-dependent phenotypes in animal models have been confined to expressing mutant DISC1. Here we investigated how pathology of full-length DISC1 protein could be a major mechanism in sporadic mental illness. We demonstrate that a novel transgenic rat model, modestly overexpressing the full-length DISC1 transgene, showed phenotypes consistent with a significant role of DISC1 misassembly in mental illness. The tgDISC1 rat displayed mainly perinuclear DISC1 aggregates in neurons. Furthermore, the tgDISC1 rat showed a robust signature of behavioral phenotypes that includes amphetamine supersensitivity, hyperexploratory behavior and rotarod deficits, all pointing to changes in dopamine (DA) neurotransmission. To understand the etiology of the behavioral deficits, we undertook a series of molecular studies in the dorsal striatum of tgDISC1 rats. We observed an 80% increase in high-affinity DA D2 receptors, an increased translocation of the dopamine transporter to the plasma membrane and a corresponding increase in DA inflow as observed by cyclic voltammetry. A reciprocal relationship between DISC1 protein assembly and DA homeostasis was corroborated by in vitro studies. Elevated cytosolic dopamine caused an increase in DISC1 multimerization, insolubility and complexing with the dopamine transporter, suggesting a physiological mechanism linking DISC1 assembly and dopamine homeostasis. DISC1 protein pathology and its interaction with dopamine homeostasis is a novel cellular mechanism that is relevant for behavioral control and may have a role in mental illness.