Impaired ability to infer the mental states of others (theory of mind; ToM) is considered to be a key contributor to the poor social functioning of patients with schizophrenia. Although neuroimaging and lesion studies have provided empirical evidence for the neural basis of ToM ability, including the involvement of several prefrontal and temporal structures, the association between pathology of these structures and ToM impairment in schizophrenia patients is less well understood. To address this issue, we investigated structural brain abnormalities and ToM impairment in patients with schizophrenia, and examined the relationship between them. Twenty schizophrenia patients and 20 age-, sex- and education-matched healthy participants underwent magnetic resonance imaging (MRI) and were examined for ToM ability based on the revised version of the "Reading the Mind in the Eyes" (or Eyes) test [Baron-Cohen, S., Wheelwright, S., Hill, J., Raste, Y., Plumb, I., 2001. The 'Reading the Mind in the Eyes' test revised version: A study with normal adults, and adults with Asperger syndrome or high-functioning autism. J. Child Psychol. Psychiatry 42, 241-251]. Voxel-based morphometry (VBM) was performed to investigate regional brain alterations. Relative to normal controls, schizophrenia patients exhibited gray matter reductions in the dorsomedial prefrontal cortex (DMPFC), left ventrolateral prefrontal cortex (VLPFC), ventromedial prefrontal cortex (VMPFC), anterior cingulate cortex (ACC), right superior temporal gyrus (STG) and right insula. The patients performed poorly on the Eyes test. Importantly, poor performance on the Eyes test was found to be associated with gray matter reduction in the left VLPFC in the patient group. These results suggest that prefrontal cortical reduction, especially in the left VLPFC, is a key pathology underlying the difficulties faced by schizophrenia patients in inferring the mental states of others.