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To study how the 22q11.2 deletion predisposes to psychiatric disease, we generated induced pluripotent stem cells from deletion carriers and controls, as well as utilized CRISPR/Cas9 to introduce the heterozygous deletion into a control cell line. Upon differentiation into neural progenitor cells, we found the deletion acted in trans to alter the abundance of transcripts associated with risk for neurodevelopmental disorders including Autism Spectrum Disorder. In more differentiated excitatory neurons, altered transcripts encoded presynaptic factors and were associated with genetic risk for schizophrenia, including common (per-SNP heritability p (τc)= 4.2 x 10-6) and rare, loss of function variants (p = 1.29×10-12). These findings suggest a potential relationship between cellular states, developmental windows and susceptibility to psychiatric conditions with different ages of onset. To understand how the deletion contributed to these observed changes in gene expression, we developed and applied PPItools, which identifies the minimal protein-protein interaction network that best explains an observed set of gene expression alterations. We found that many of the genes in the 22q11.2 interval interact in presynaptic, proteasome, and JUN/FOS transcriptional pathways that underlie the broader alterations in psychiatric risk gene expression we identified. Our findings suggest that the 22q11.2 deletion impacts genes and pathways that may converge with risk loci implicated by psychiatric genetic studies to influence disease manifestation in each deletion carrier.