Although malfunctioning of inhibitory processes is proposed as a pathophysiological mechanism in schizophrenia and has been studied extensively with the P50 gating paradigm, the brain regions involved in generating and suppressing the P50 remain unclear. The current investigation used EEG source analysis and the standard S1-S2 paradigm to clarify the neural structures associated with P50 gating in 16 schizophrenia patients and 14 healthy subjects. Based on prior research, the superior temporal gyrus, hippocampus, dorsolateral prefrontal cortex, thalamus, and their dipole moments were evaluated. In modeling the P50, a neural network involving all four brain regions provided the best goodness-of-fit across both groups. In healthy subjects, the P50 ratio score correlated positively with the hippocampal dipole moment ratio, whereas a significant association with the DLPFC dipole moment ratio was observed in schizophrenia patients. In each instance, the neural structure was found to account for unique variance in explaining the P50 ratio, along with some suggestion of DLPFC involvement in healthy subjects.