As a means toward understanding the neural bases of schizophrenic thought disturbance, we examined brain activation patterns in response to semantically and superficially encoded words in patients with schizophrenia. Nine male schizophrenic and 9 male control subjects were tested in a visual levels of processing (LOP) task first outside the magnet and then during the fMRI scanning procedures (using a different set of words). During the experiments visual words were presented under two conditions. Under the deep, semantic encoding condition, subjects made semantic judgments as to whether the words were abstract or concrete. Under the shallow, nonsemantic encoding condition, subjects made perceptual judgments of the font size (uppercase/lowercase) of the presented words. After performance of the behavioral task, a recognition test was used to assess the depth of processing effect, defined as better performance for semantically encoded words than for perceptually encoded words. For the scanned version only, the words for both conditions were repeated in order to assess repetition-priming effects. Reaction times were assessed in both testing scenarios. Both groups showed the expected depth of processing effect for recognition, and control subjects showed the expected increased activation of the left inferior prefrontal cortex (LIPC) under semantic encoding relative to perceptual encoding conditions as well as repetition priming for semantic conditions only. In contrast, schizophrenics showed similar patterns of fMRI activation regardless of condition. Most striking in relation to controls, patients showed decreased LIFC activation concurrent with increased left superior temporal gyrus activation for semantic encoding versus shallow encoding. Furthermore, schizophrenia subjects did not show the repetition priming effect, either behaviorally or as a decrease in LIPC activity. In patients with schizophrenia, LIFC underactivation and left superior temporal gyrus overactivation for semantically encoded words may reflect a disease-related disruption of a distributed frontal temporal network that is engaged in the representation and processing of meaning of words, text, and discourse and which may underlie schizophrenic thought disturbance.