The action of CNS inhibitory neuronal mechanisms was tested in acutely psychotic unmedicated schizophrenic patients and in normal controls. An early positive component of the auditory average evoked response recorded at the vertex 50 msec after a click stimulus was studied. Stimuli were delivered at 10-sec intervals to establish a base-line response. Inhibitory mechanisms were then tested using a conditioning-testing paradigm by assessing the change in response to a second stimulus following the first at either 0.5, 1.0, or 2.0-sec intervals. At the 0.5-sec interval, normal controls had over a 90% mean decrement in response, whereas schizophrenics showed less than a 15% mean decrement. At 2-sec intervals, responses from normals were still 30 to 50% diminished, but those from schizophrenics showed an increased response to the stimulus compared to base line. The data suggest that normally present inhibitory mechanisms are markedly reduced in schizophrenics. Failure of these inhibitory mechanisms may be responsible for the defects in sensory gating which are thought to be an important part of the pathophysiology of schizophrenia.