The cognitive significance of P300 abnormalities in schizophrenia and obsessive-compulsive disorder (OCD) was investigated. P300 was measured by an auditory oddball paradigm, in which a series of standard tones (1000 Hz) and target tones (1500 Hz) were presented. The subject's task was to count the number of the presented target tones. Cognitive functions were evaluated by neuropsychological tests, which were chosen to be sensitive to frontal and temporal dysfunction. Twenty-two schizophrenic patients, 19 OCD patients and 21 healthy controls participated. Event-related potentials measured at 15 electrode sites, which consisted of five levels on the left-right dimension and three levels on the anterior-posterior dimension, were included in the statistical analysis. P300 amplitudes on all 15 electrode sites were significantly smaller in schizophrenic and OCD patients than in the controls. Schizophrenic patients performed poorly on almost all neuropsychological tests, while OCD patients showed impaired performance on the Rey-Osterrieth Complex Figure Test and on a controlled oral word association test. In schizophrenic patients, P300 amplitude was associated with performance on verbal memory and learning by the Luria-Nebraska Neuropsychological Battery, while for OCD patients, P300 amplitude was related to the Trail Making Test, Part B response time. These results indicate that schizophrenic patients have generalized cognitive impairments, which are substrated by a wide range of cortical dysfunctions. The major cognitive deficits observed in OCD patients were impairments of controlled attention and self-guided, flexible behavior, which are mediated by the fronto-striatal system. The neurophysiological mechanisms underlying P300 abnormalities observed in schizophrenic and OCD patients are discussed.