Objective: The dorsolateral prefrontal cortex and the anterior cingulate cortex are critical components of the brain circuitry underlying executive control. The objective of this study was to investigate control-related dorsolateral prefrontal cortex functioning and conflict-related anterior cingulate cortex functioning in a group of never medicated first-episode schizophrenia patients to determine whether both regions show dysfunction at illness onset. A second objective was to assess short-term effects of atypical antipsychotic medication on dorsolateral prefrontal cortex and anterior cingulate cortex functioning. Method: First-episode schizophrenia patients (N=23) and healthy comparison subjects (N=24) underwent event-related fMRI and performed a cognitive task designed to functionally dissociate the two regions. Four weeks after initiation of pharmacotherapy for patients, a subset of 11 patients and 16 comparison subjects underwent a repeat assessment. Results: At baseline, patients exhibited hypoactivation in the dorsolateral prefrontal cortex and anterior cingulate cortex. After 4 weeks of antipsychotic treatment, the patients demonstrated improved functioning in the anterior cingulate cortex but not in the dorsolateral prefrontal cortex. Conclusions: These findings confirm the presence of dorsolateral prefrontal cortex dysfunction early in the course of schizophrenia and suggest that anterior cingulate cortex functioning may be altered at illness onset as well. Results also suggest that anterior cingulate cortex functioning may be especially sensitive to remedial antipsychotic treatment effects. These findings are consistent with an emerging literature documenting short-term benefits of atypical antipsychotic medication for the neural circuitry underlying cognitive deficits in schizophrenia.