Impairments in reality testing are core features of numerous neuropsychiatric conditions. However, relatively few animal models have been developed to assess this critical facet of neuropsychiatric illness, thus impeding our understanding of the underlying central systems and circuits. Using mice in which dominant-negative Disrupted-in-Schizophrenia-1 is expressed throughout central nervous system circuitry (DN-DISC1-PrP), the capacity for an auditory conditioned stimulus (CS) to evoke perceptual processing of an absent sucrose solution was examined. At test, during CS presentations, DN-DISC1-PrP mice consumed more water and displayed a licking profile that is more typically revealed while ingesting a sweet-tasting solution. DN-DISC1-PrP mice also displayed greater c-fos expression in the insular (gustatory) cortex when consuming water in the presence of the CS. This capacity for the CS to more readily substitute for the taste features of the absent sucrose solution in DN-DISC1-PrP mice was attenuated following systemic treatment with the antipsychotic haloperidol. Conversely, social isolation during adolescence promoted the manifestation of these effects. These results provide strong validation for using associative learning procedures to examine dopamine-mediated reality testing associated with insular cortex activation.