Schizophrenia is associated with a wide range of symptoms. These include auditory hallucinations, delusions, and experiences that one is not in control of one’s own thoughts and actions, but that they are inserted by an outside agency. It has been proposed that a disturbance in the sense of self may account for many of these symptoms. This disturbance in turn may be associated with source monitoring deficits. In other words, individuals with schizophrenia may misattribute the source of their own thoughts and actions to an outside agency, which then results in the experience of psychosis such as that of hearing voices. To explain the source monitoring deficits, it has been proposed that this illness involves impairment in corollary discharge mechanisms. Corollary discharge refers to preparation of sensory systems that will be affected by an action in advance of that action, which then allows this action to be recognized as one’s own. Current research on corollary discharges suggests that they may involve the thalamus, which is notably affected in schizophrenia in terms of volume loss. Sleep abnormalities in this illness also suggest thalamic dysfunction as sleep spindles, which are markedly reduced in schizophrenia, require intact thalamocortical interactions. In this review, evidence is presented that suggests that propagation of corollary discharges and sleep spindles may be two mechanistically related processes as both involve trans-thalamic cortico-cortical interactions. These interactions may be impaired in schizophrenia and characterization of their mechanism may constitute a step towards developing a dynamic model of schizophrenia.