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OBJECTIVE: Speaking is hypothesized to generate a corollary discharge of motor speech commands transmitted to the auditory cortex, dampening its response to self-generated speech sounds. Event-related potentials were used to test whether failures of corollary discharge during speech contribute to the pathophysiology of schizophrenia. METHOD: The N1 component of the event-related potential elicited by vowels was recorded while the vowels were spoken by seven patients with schizophrenia and seven healthy comparison subjects and while the same vowels were played back. RESULTS: In the healthy subjects, the N1 elicited by spoken vowels was smaller than the N1 elicited by played-back vowels. This reduction in N1 elicited by spoken vowels was not observed in the patients with schizophrenia. CONCLUSIONS: These findings provide direct neurophysiological evidence for a corollary discharge that dampens sensory responses to self-generated, relative to externally presented, percepts in healthy comparison subjects and its failure in patients with schizophrenia.