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OBJECTIVE: This study investigated the functional neuroanatomy of inner speech and auditory verbal imagery in schizophrenic patients predisposed to auditory hallucinations. METHOD: Eight patients with schizophrenia with a history of prominent auditory hallucinations and six comparison subjects underwent functional magnetic resonance imaging while generating inner speech or imagining external speech. RESULTS: Patients showed no differences while generating inner speech but experienced a relatively attenuated response in the posterior cerebellar cortex, hippocampi, and lenticular nuclei bilaterally and the right thalamus, middle and superior temporal cortex, and left nucleus accumbens during auditory verbal imagery. CONCLUSIONS: Patients with schizophrenia who were prone to auditory hallucinations show attenuated activation when processing inner speech in areas implicated in verbal self-monitoring.