We investigated the relationship between the P300, neuropsychological test performance and symptomatology in recent-onset schizophrenic patients (n = 45) to gain insight into underlying mechanisms of abnormal P300 in schizophrenia. The P300 was recorded in two sessions with an intermission of five minutes, at the midline frontal, central and parietal electrode site. P300 amplitude and latency were compared with those obtained in 25 controls. Twenty patients were treated with olanzapine and 19 patients with risperidone. P300 amplitude was smaller and latency longer in patients than in controls. In the patient group, parietal P300 amplitude reduction was related to poorer performance on neuropsychological tests of memory. Frontal P300 amplitude reduction was related to impaired selective attention. In patients with negative symptomatology, P300 amplitude was reduced in the second P300 session compared with the first. Patients on risperidone demonstrated a smaller parietal P300 amplitude than patients using olanzapine. Reduced parietal P300 amplitude could signify a dysfunction in the continuous memory updating of current events. Negative symptomatology may be associated with a time dependent decrease in neuronal firing, as indicated by reduced P300 amplitude in the second P300 session.