Neuropathological abnormalities in schizophrenia have been demonstrated in the parahippocampal gyrus (PHG). Only a few studies on first-episode neuroleptic-naive schizophrenia patients have been done using in vivo neuroimaging techniques. The authors examined the PHG morphology using structural MRI in neuroleptic-naive subjects with first episode psychoses. Volumetric measurements of PHG and intracranial volume (ICV) were obtained on subjects with schizophrenia and schizoaffective disorders (SCZ; n = 33), nonschizophrenia psychotic disorders (NSCZ; n = 11) and matched healthy subjects (HS; n = 43). The subjects were rated on the Brief Psychiatric Rating Scale (BPRS). Group differences and clinical correlations of ICV-adjusted PHG volumes were examined. Left PHG was significantly different across the groups consisting of SCZ, NSCZ and HS. PHG was larger in NSCZ compared to SCZ but not relative to HS. Bilaterally, PHG was no different between SCZ and HS. In pooled psychotic patients, the PHG volume negatively correlated with total positive symptom, delusion and conceptual disorganization scores on BPRS. Patients with delusions had relatively smaller PHG compared to nondelusional subjects. Observed differences in PHG volume in first-episode neuroleptic-naive patients suggest that these observations are not confounded by illness chronicity or medication effects. Significant association of PHG volume with psychotic symptoms suggests that PHG pathology plays an important role in the etiopathology of psychosis and its symptoms.