Anatomical studies have shown that cerebral asymmetry is reduced in schizophrenia. Functional asymmetry appears to be reduced also, as was shown with dichotic listening studies. These studies, however, have not revealed whether reduced lateralization is the result of decreased language activity of the left hemisphere or whether it is the consequence of increased language-related activity in the right hemisphere. To elucidate this, we examined hemispheric dominance for language processing by means of functional MRI. Twelve schizophrenic patients and twelve healthy controls were scanned while they were engaged in a verb-generation and a semantic decision task. Activation was measured bilaterally in the frontal, temporal and temporo-parietal language areas, and a laterality index was derived from activity in these regions of interest in the left and the right hemispheres. Clinical symptoms were rated at the time of scanning. The results indicate that language processing is less lateralized in patients than in controls (a mean laterality index of 0.35 versus 0.63, respectively, difference p<0.01). Analysis of variance of the extent of activity, i.e. numbers of active voxels, revealed a significant hemisphere by group interaction (F(1,22)=11.2, p<0.001), which was due to increased activation in the right hemisphere of the patients (post hoc t-test p<0.05). We found no evidence of reduced activity in the left hemisphere. Further analysis of clinical symptoms rated prior to scanning revealed that decreased language lateralization was associated with more severe hallucinations (r=-0.54, p<0.05). We postulate that decreased language lateralization in schizophrenia may result from failure to inhibit the right hemisphere.