Impairments of recognition memory for words and attenuation of the ERP 'old-new' effect have been found in patients with left medial temporal lobe damage. If left temporal lobe dysfunction in schizophrenia involves medial structures (e.g. hippocampus), then schizophrenic patients might show similar abnormalities of verbal recognition memory. This study recorded ERPs from 30 electrode sites while subjects were engaged in a continuous word recognition memory task. Results are reported for 24 patients having a diagnosis of schizophrenia (n = 16) or schizoaffective disorder (n = 8) and 19 age-matched healthy controls. Both patients and controls showed the expected 'old-new' effect, with greater late positivity to correctly recognized old words at posterior sites, and there was also no significant difference between groups in P3 amplitude. However, accuracy of word recognition memory was poorer in patients than controls, and patients showed markedly smaller N2 amplitude. Reduced amplitudes of N2 and N2-P3 were associated with poorer performance, with highest correlations over the left inferior parietal (N2) and left medial parietal (N2-P3) region. Moreover, patients failed to show significantly greater left than right hemisphere amplitude of N2-P3 at posterior sites, which was seen for healthy controls. These findings suggest that impaired word recognition in schizophrenia may arise from a left lateralized deficit at an early stage of processing, beginning at 200-300 ms after word onset.