Cognitive research in schizophrenia has traditionally focused on “high-order” brain regions, such as prefrontal cortex, and on related neuropsychological processes such as executive functioning and/or working memory. Recent studies involving visual cortex, however, have demonstrated impairments in processes such as sensory gain control and integration, which are manifest particularly within the magnocellular (dorsal stream) system. These sensory processing deficits underly such processes as object recognition and face identification and thus may play a prominent role in the pathophysiology of schizophrenia. Understanding the basic brain mechanisms that underlie this disorder is an important and necessary step towards gaining a more complete understanding of the disease and may lead to improved treatment strategies.