The neural mechanisms behind cognitive deficits in schizophrenia still remain unclear. Functional neuroimaging studies on working memory (WM) yielded inconsistent results, suggesting task performance as a moderating variable of prefrontal activation. Beyond regional specific activation, disordered integration of brain regions was supposed as a critical pathophysiological mechanism of cognitive deficits in schizophrenia. Here, we first hypothesized that prefrontal activation implicated in WM depends primarily on task performance and therefore stratified participants into performance subgroups. Second, in line with the dysconnectivity hypothesis, we asked whether connectivity in the prefrontal-parietal network underlying WM is altered in all patients. We used functional magnetic resonance imaging in human subjects (41 schizophrenia patients, 42 healthy controls) and dynamic causal modeling to examine effective connectivity during a WM task. In line with our first hypothesis, we found that prefrontal activation was differentially modulated by task performance: there was a significant task by group by performance interaction revealing an increase of activation with performance in patients and a decrease with performance in controls. Beyond that, we show for the first time that WM-dependent effective connectivity from prefrontal to parietal cortex is reduced in all schizophrenia patients. This finding was independent of performance. In conclusion, our results are in line with the highly influential hypothesis that the relationship between WM performance and prefrontal activation follows an inverted U-shaped function. Moreover, this study in a large sample of patients reveals a mechanism underlying prefrontal inefficiency and cognitive deficits in schizophrenia, thereby providing direct experimental evidence for the dysconnectivity hypothesis.