This review examines evidence which demonstrates the relationships between psychotic phenomena and underlying cognitive or neurophysiological deficits. Recent studies examining dysfunctions attributable to frontal-lobe involvement and attentional systems are reviewed. Evidence suggesting impairments of memory in schizophrenia is continuing to accrue and the work in this area is considered. The debate as to whether schizophrenia represents a lateralized central nervous system dysfunction continues, and relevant papers concerned with this issue are presented.