In a previous functional magnetic resonance imaging (fMRI) study of high functioning outpatients with remitted schizophrenia, we found increased activity compared with healthy subjects across multiple areas of the brain, including the dorsolateral frontal cortex and the anterior cingulate, during a modified Stroop task. The same fMRI procedure was used in this subsequent study to investigate eight unmedicated patients during an acute episode of schizophrenia and eight healthy control subjects. Patients showed a reduced activation in dorsolateral prefrontal, anterior cingulate and parietal regions and a higher activation in temporal regions and posterior cingulate compared to healthy controls. Healthy controls showed a trend towards higher accuracy in the modified Stroop task compared to schizophrenia patients. Treatment with second generation antipsychotics may improve executive performance in patients with schizophrenia and facilitate a normalization of functional hypofrontality after symptomatic improvement.