Prefrontal-parietal networks are essential to many cognitive processes, including the ability to differentiate new from previously presented items. As patients with schizophrenia exhibit structural abnormalities in these areas along with well documented decrements in recognition memory, we hypothesized that these patients would demonstrate memory-related abnormalities in prefrontal and parietal physiology as measured by both functional magnetic resonance imaging and magnetoencephalography (MEG). Medicated outpatients with schizophrenia (n = 18) and age-matched healthy control subjects (n = 18) performed an old-new recognition memory task while physiological data were obtained. Whereas controls exhibited strong, bilateral activation of prefrontal and posterior parietal regions during successful identification of old versus new items, patients exhibited greatly attenuated activation of the right prefrontal and parietal cortices. However, within the patient group, there was strong correlation between memory performance and activation of these right-sided regions as well as a tight correlation between old-new effect-related activations in frontal and parietal regions, a pattern not seen in control subjects. Using MEG, control subjects-but not patients-exhibited a sequential pattern of old > new activity in the left posterior parietal cortex and then right prefrontal cortex; however, patients uniquely exhibited old > new activity in right temporal cortex. Collectively, these findings point to markedly different distributions of regional specialization necessary to complete the old-new item recognition task in patients versus controls. Inefficient utilization of prefrontal-parietal networks, with compensatory activation in temporal regions, may thus contribute to deficient old-new item recognition in schizophrenia.