The prefrontal cortex (PFC) is critical for regulating stress responses through top-down control over limbic and subcortical structures. The PFC undergoes a prolonged developmental process that only reaches maturation during adulthood, causing it to be highly sensitive to environmental insults during neurodevelopment, such as adolescence. During this critical period, synaptic pruning, the maturation of inhibitory GABAergic interneurons, and the refinement of dopaminergic transmission collectively establish the excitatory-inhibitory balance necessary for adaptive behavior. Impairment of the PFC due to developmental disruptions increases susceptibility to maladaptive stress responses. These responses can, in turn, contribute to the development of major depressive disorder and schizophrenia. In depression, a dysfunctional PFC fails to effectively inhibit the amygdala, which contributes to hyperactivity in stress-related circuits, hypodopaminergic states, and anhedonia. In schizophrenia, a neurodevelopmental PFC dysfunction would precipitate hippocampal circuit disruption driven by stress. The inability of an immature PFC to regulate the amygdala response to stress would trigger an increased excitatory drive to the ventral hippocampus, which is proposed to underlie the excessive limbic drive, hippocampal hyperactivity, and a hyperdopaminergic state. In addition, the activation of the mesocortical dopaminergic system by stress facilitates the PFC response to stress, both during adulthood and adolescence. A dopamine (DA)-induced unregulated stress response disrupts the excitatory and inhibitory transmission within the PFC, which plays a critical role in its function. Understanding the interplay between stress and PFC activity/maturation to regulate the circuit toward adaptive or maladaptive outcomes offers critical insights for early intervention and prevention. Early changes in the PFC could underlie vulnerability to unregulated stress response and its consequent effect in contributing to schizophrenia and depression. In this way, early intervention may limit the impact and prevent further circuit dysregulation leading to pathological states.