It has been previously demonstrated that unmedicated persons with schizophrenia have deficits in cortical inhibition (CI) as indexed with transcranial magnetic stimulation (TMS). This inhibition is largely mediated by cortical GABAergic mechanisms. It has also been demonstrated that these inhibitory deficits may be normalized with the use of atypical antipsychotic medications. The purpose of this study, therefore, was to examine the effects of clozapine on TMS measures of CI and to compare these effects to unmedicated persons with schizophrenia and healthy subjects. We used two TMS inhibitory paradigms: short interval intra-cortical inhibition (SICI) and the cortical silent period (CSP) to evaluate CI in 10 clozapine-treated persons with schizophrenia, 6 unmedicated persons with schizophrenia and 10 healthy subjects. Clozapine-treated persons with schizophrenia had significantly longer CSPs compared with healthy subjects and unmedicated persons with schizophrenia. There were no significant differences in SICI between groups, however, the severity of psychotic symptoms was correlated with reduced SICI across all persons with schizophrenia. Our findings suggest that clozapine treatment is associated with greater CI in persons with schizophrenia and this increase may be related to potentiation of cortical GABAergic receptor mediated inhibitory neurotransmission. Our results also confirm previous findings suggesting that deficits in CI are related to the severity of psychotic symptoms in persons with schizophrenia.