Schizophrenic patients generally perform poorly on tasks that address executive functions. According to several imaging studies, the dorsolateral prefrontal cortex is hypoactive in schizophrenic patients during these tasks. It is not, however, clear whether this finding is associated more with impaired performance than with the illness itself, as performance has not been taken into account. We examined brain activity associated with executive function in schizophrenia using an experimental fMRI design that reveals performance effects, enabling correction for performance differences between groups. As this approach has not been reported before, and because brain function can be affected by medication, the effect of antipsychotic medication was also investigated. A task was used that requires logical reasoning, alongside a closely matched control task. Performance was accounted for by including individual responses in fMRI image analyses, as well as in group-wise analysis. Effects of medication were addressed by comparing medication-naïve patients and patients on atypical antipsychotic medication with healthy controls in two separate experiments. Imaging data were analysed with a novel, performance-driven method, but also with a method that is similar to that used in earlier studies, which reported hypofrontality. A modest reduction in performance was found in both patient groups. Brain activity associated with logical reasoning was correlated positively with performance in all groups. In patients on medication, activity did not differ from that in controls after correcting for difference in performance. In contrast, performance-corrected activity was significantly elevated in medication-naïve patients. This study indicates that schizophrenia may be associated with excessive recruitment of brain systems during logical reasoning. Considering the fact that performance was reduced in the patients, we argue that the efficiency of neural communication may be affected by the illness. It appears that in patients on atypical antipsychotic medication, this neural inefficiency is normalized. The study shows that performance is an important factor in the interpretation of differences between schizophrenic patients and controls. The reported association between performance and brain activity is relevant to clinical imaging studies in general.