People with schizophrenia show probabilistic association learning impairment in conjunction with abnormal neural activity. The selective estrogen receptor modulator (SERM) raloxifene preserves neural activity during memory in healthy older men and improves memory in schizophrenia. Here, we tested the extent to which raloxifene modifies neural activity during learning in schizophrenia. Nineteen people with schizophrenia participated in a twelve-week randomized, double-blind, placebo-controlled, cross-over adjunctive treatment trial of the SERM raloxifene administered orally at 120 mg daily to assess brain activity during probabilistic association learning using functional magnetic resonance imaging (fMRI). Raloxifene improved probabilistic association learning and significantly increased fMRI BOLD activity in the hippocampus and parahippocampal gyrus relative to placebo. A separate region of interest confirmatory analysis in 21 patients vs 36 healthy controls showed a positive association between parahippocampal neural activity and learning in patients, but no such relationship in the parahippocampal gyrus of healthy controls. Thus, selective estrogen receptor modulation by raloxifene concurrently increases activity in the parahippocampal gyrus and improves probabilistic association learning in schizophrenia. These results support a role for estrogen receptor modulation of mesial temporal lobe neural activity in the remediation of learning disabilities in both men and women with schizophrenia.