At the biological level, auditory hallucinations (and hallucinations of the other senses) have been strongly linked to an imbalance of chemicals in the brain. Specifically, a chemical called dopamine has been documented in excessive amounts not only in schizophrenics but in people experiencing drug-induced hallucinations. When dopamine is reduced to normal levels through medication, this often causes a significant reduction in hallucinations or at least a decrease in their intensity.

Another brain abnormality linked to auditory hallucinations is abnormal activity of the thalamus, which is a structure in the brain that is responsible for organizing information received from the senses and sending it toward more complex brain regions. Basically, the thalamus sends information from the ears to the auditory cortex in the brain, which interprets what sounds are being heard. In the case of auditory hallucinations, the thalamus becomes very active despite a lack of external sound waves that reach the ears which would normally cause such activity. In schizophrenics, the thalamus is not only overactive, but reduced in size.

In addition to the abnormal activity of the thalamus and auditory cortex, abnormal activity in the right side of the brain or right hemisphere has also been associated with auditory hallucinations. In the normal brain, much of the brain activity involved with language is specialized in the left hemisphere. The right hemisphere is normally inhibited in regard to language. In patients suffering from auditory hallucinations, it has been found that there is no such specialization between brain hemispheres and the right can be just as active as the left for activities involved in language.