The maintenance of a mental image in memory over a time scale of seconds is mediated by the persistent discharges of neurons in a distributed brain network. The representation of the spatial location of a remembered visual stimulus has been studied most extensively and provides the best-understood model of how mnemonic information is encoded in the brain. Neural correlates of spatial working memory are manifested in multiple brain areas, including the prefrontal and parietal association cortices. Spatial working memory ability is severely compromised in schizophrenia, a condition that has been linked to prefrontal cortical malfunction. Recent computational modeling work, in interplay with physiological studies of behaving monkeys, has begun to identify microcircuit properties and neural dynamics that are sufficient to generate memory-related persistent activity in a recurrent network of excitatory and inhibitory neurons during spatial working memory. This review summarizes recent results and discusses issues of current debate. It is argued that understanding collective neural dynamics in a recurrent microcircuit provides a key step in bridging the gap between network memory function and its underlying cellular mechanisms. Progress in this direction will shed fundamental insights into the neural basis of spatial working memory impairment associated with mental disorders.