Schizophrenics show P3 amplitude reduction and topographic asymmetries. It is unclear whether the underlying cause of these deficits is primarily functional or structural. This study examined the effect of stimulus discriminability and task instruction on behavioral performance and P3 in schizophrenics and normal control subjects. Stimulus discriminability was manipulated by varying the overall loudness and pitch disparity of the two tones in an auditory oddball paradigm. Instructions emphasized either speed or accuracy of response. Instructions had no significant effects on reaction time, perceptual sensitivity, response bias, or P3. With increased discriminability, however, both groups improved in mean reaction time to targets and perceptual sensitivity. In controls, P3 became earlier and larger with increased stimulus discriminability and was consistently larger over left temporal areas than over right temporal areas. In schizophrenics, P3 latency was related to stimulus discriminability, but amplitude was not; P3 amplitude did not increase with improvement of perceptual sensitivity and reaction time. Unlike normal controls, schizophrenics had a P3 asymmetry at temporal sites, with reduced left-sided voltages. The results are not consistent with a primarily functional cause of P3 aberrations in schizophrenia and are compatible with the hypothesis that P3 amplitude deficits in schizophrenia are related to underlying pathophysiology of temporal lobe generator sites.