Current evidence suggests that dysregulation of GABAergic interneurons contributes to neural and behavioral deficits in several neurodevelopmental disorders, including schizophrenia. However, there are multiple populations of interneurons and their respective roles in psychiatric disease remain poorly explored. Neuregulin 1 (NRG1) and its interneuron-specific tyrosine kinase receptor ERBB4 are risk genes for schizophrenia, and the Nrg1/ErbB4 pathway is important for normal cortical development. Using a conditional ErbB4 deletion model, we directly tested the role of vasoactive intestinal peptide (VIP)-expressing interneurons in schizophrenia-related deficits in vivo. ErbB4 removal from VIP interneurons during development leads to changes in their activity, along with severe dysregulation of the temporal organization and state-dependence of cortical activity. As a result of these neural circuit alterations, animals in which VIP interneurons lack ErbB4 exhibit behavioral abnormalities, reduced cortical responses to sensory stimuli, and impaired sensory learning. Our data support a key role for VIP interneurons in normal cortical circuit development and suggest that their disruption contributes to pathophysiology in the ErbB4 model of schizophrenia. These findings provide a new perspective on the role of GABAergic interneuron diversity in the disruption of cortical function in complex psychiatric diseases.