Auditory N2 and P3 components of event-related potentials were assessed in first-episode schizophrenic and normal control subjects (n=12/group). P3 amplitude was decreased in the patients most prominently over the frontal areas in contrast to a widespread P3 amplitude decrease reported in chronic schizophrenia. Moreover, frontal attenuation of P3 amplitude was greater in the non-medicated compared with medicated patients, a finding that suggests frontal areas are primarily affected at the onset of the first schizophrenic episode. Prolongation of N2 and P3 latencies was also observed in the patients, which indicates that stimulus classification and memory updating processes were slowed even in early stages of schizophrenia. These findings indicate that first-episode schizophrenic patients produce N2 and P3 abnormalities that are distinct from those in chronic patients, and that psychotropic medication can attenuate event-related potential effects in specific ways.