Event-related potentials (ERPs) were recorded while schizophrenic patients and healthy controls read congruous and incongruous sentences in anticipation of a memory test. The schizophrenic group performed more poorly in both recognition memory and cued recall tests. The two groups did not differ in the amplitude of the N400 component of the ERP but the difference between the ERPs to congruous and incongruous sentences persisted longer in the schizophrenic sample. The schizophrenic sample also showed reduced parietal positivity and a reduced effect of congruity on the late positive component that follows N400. Within the schizophrenic sample, measures of attentional impairment and positive thought disorder were correlated with mean amplitude of both the N400 and the subsequent positivity. The results imply that the structure and spread of activation within semantic memory is not impaired in schizophrenia. Rather, impairments appear to lie in processes required to integrate activated information with the current context.