Visual motion perception is normally mediated by neural processing in the posterior cortex. Focal damage to the middle temporal area (MT), a posterior extrastriate region, induces motion perception impairment. It is unclear, however, how more broadly distributed cortical dysfunction affects this visual behavior and its neural substrates. Schizophrenia manifests itself in a variety of behavioral and perceptual abnormalities that have proved difficult to understand through a dysfunction of any single brain system. One of these perceptual abnormalities involves impaired motion perception. Motion processing provides an opportunity to clarify the roles of multiple cortical networks in both healthy and schizophrenic brains. Using fMRI, we measured cortical activation while participants performed two visual motion tasks (direction discrimination and speed discrimination) and one nonmotion task (contrast discrimination). Normal controls showed robust cortical activation (BOLD signal changes) in MT during the direction and speed discrimination tasks, documenting primary processing of sensory input in this posterior region. In patients with schizophrenia, cortical activation was significantly reduced in MT and significantly increased in the inferior convexity of the prefrontal cortex, an area that is normally involved in higher level cognitive processing. This shift in cortical responses from posterior to prefrontal regions suggests that motion perception in schizophrenia is associated with both deficient sensory processing and compensatory cognitive processing. Furthermore, this result provides evidence that in the context of broadly distributed cortical dysfunction, the usual functional specificity of the cortex becomes modified, even across the domains of sensory and cognitive processing.