BackgroundAccurate perception of visual contours is essential for seeing and differentiating objects in the environment. Both the ability to detect visual contours and the influence of perceptual context created by surrounding stimuli are diminished in people with schizophrenia (SCZ). The central aim of the present study was to better understand the biological underpinnings of impaired contour integration and weakened effects of perceptual context. Additionally, we sought to determine whether visual perceptual abnormalities reflect genetic factors in SCZ and are present in other severe mental disorders.MethodsWe examined behavioral data and event-related potentials (ERPs) collected during the perception of simple linear contours embedded in similar background stimuli in 27 patients with SCZ, 23 patients with bipolar disorder (BP), 23 first-degree relatives of SCZ, and 37 controls.ResultsSCZ exhibited impaired visual contour detection while BP exhibited intermediate performance. The orientation of neighboring stimuli (i.e. flankers) relative to the contour modulated perception across all groups, but SCZ exhibited weakened suppression by the perceptual context created by flankers. Late visual (occipital P2) and cognitive (centroparietal P3) neural responses showed group differences and flanker orientation effects, unlike earlier ERPs (occipital P1 and N1). Moreover, behavioral effects of flanker context on contour perception were correlated with modulation in P2 & P3 amplitudes.ConclusionIn addition to replicating and extending findings of abnormal contour integration and visual context modulation in SCZ, we provide novel evidence that the abnormal use of perceptual context is associated with higher-order sensory and cognitive processes.