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Belief updating is thought to be impaired in schizophrenia, leading to delusions. The neural substrates underlying belief updating are unknown, in part due to a lack of appropriate animal models and behavior readouts. We generated mice bearing a schizophrenia-associated point mutation in Grin2a (Grin2a) and developed a computationally trackable foraging task to assess belief-driven decision strategies in mice. Grin2a mice performed less optimally than their wild-type (WT) littermates, due to unstable cognitive states related to noisy representation of dynamic task values. We identified the mediodorsal (MD) thalamus as being hypofunctional in Grin2a mice and showed that MD neurons encode dynamic task values and cognitive states in WT mice. Optogenetic inhibition of MD neurons in WT mice phenocopied Grin2a mice and enhancing MD activity rescued task deficits in Grin2a mice. Together, our study identifies the MD thalamus as a key node for schizophrenia-relevant cognitive dysfunction and a potential target for future therapeutics.