Context processing is conceptualized as an executive function involved in voluntary, complex actions such as overcoming automatic responses. The present study tested the hypothesis that context-processing deficits in patients with schizophrenia are associated with a dysfunction of left dorsolateral prefrontal cortex (DLPFC). Using event-related functional magnetic resonance imaging (fMRI), 17 controls and 17 medicated patients performed a version of the AX task in which a learned, automatic response had to be inhibited. In controls, left DLPFC activity increased when preparing to overcome an automatic response, whereas patients with schizophrenia showed no differential activation. In controls, context processing appeared to be associated with the differential representation of cues associated with the need to provide top-down support for overcoming automatic responses. This mechanism appeared to be impaired in patients with schizophrenia.