Abnormal activation of semantic networks characterizes schizophrenia and can be studied using the N400 event-related potential (ERP). N400 is elicited by words that are not primed by the preceding context and provides a direct measure of the neural mechanisms underlying semantic priming. Semantic priming refers to facilitated semantic processing gained through pre-exposure to semantic context, which can happen automatically if the interval between the prime and target is very short. We predicted that (1) schizophrenia patients have overly inclusive semantic networks, reflected in a less negative than expected N400 to relatively unprimed words, and (2) schizophrenia patients are deficient in their use of semantic context, responding to primed words as if they were unprimed, reflected in a more negative than expected N400 to primed words. N400s were acquired from patients with DSM-IV schizophrenia (n=26) and age-matched healthy comparison subjects (n=29) performing a picture-word verification (match vs. non-match) task. Word targets were presented 325ms after a picture prime, which either matched (CAMEL-->"camel"), or did not match (In Category: CAMEL-->"cow"; Out Category: CAMEL-->"candle") the prime. N400 data suggest that both patients and controls are sensitive to the difference between primed and unprimed words, but patients are less sensitive than controls. Similarly, N400 data suggest that both groups were sensitive to the subtler difference between classes of unprimed words (In Category versus Out Category picture-word non-matches), but patients are less sensitive, especially those with prominent negative symptoms.