Individuals with schizophrenia are known to exhibit diminished auditory gating, as manifested by prepulse inhibition of the startle response and suppression of the P50 evoked potential. Those observations indicate that schizophrenics have deficits of inhibitory auditory processing. The precedence effect is a phenomenon in which inhibitory processing in the auditory system aids the localization of sound sources and segregation of speech in complex auditory environments. We tested the hypothesis that schizophrenic subjects would exhibit deficits in psychophysical tests of the precedence effect. The performance of 12 male medicated schizophrenic subjects was compared with that of 12 male comparison subjects. Schizophrenics and comparison subjects clearly demonstrated all three aspects of the precedence effect that were evaluated: echo suppression, buildup of echo suppression, and breakdown of echo suppression. In none of these aspects did the performance of schizophrenic subjects differ significantly from that of the comparison subjects. These findings suggest that abnormalities of auditory spatial processing and speech segregation are unlikely to contribute to the clinical pathology of schizophrenia.