The hypothesis of atypical functional hemispheric asymmetry in schizophrenia is tested using the directed global–local paradigm, a lateralizing measure of visual perception. Results indicate low error rates (< 2%) for schizophrenia and normal control groups, but longer response times for the schizophrenia group. In the normal group, detection speed of global and local forms did not differ. In contrast, the schizophrenia group responded significantly faster to local relative to global forms, which supports the asymmetry hypotheses of left hemisphere overactivity–right hemisphere underactivity in schizophrenia. The normal group exhibited a global interference effect (slowed response latency to the local target in the presence of a dissimilar global distractor). When the schizophrenia group was examined according to symptom type and severity, high positive symptom severity was associated with local interference (slowed response latency to the global target in the presence of dissimilar local distractors). Negative symptoms were not associated with interference from the competing local or global forms. Patients with a combination of high positive and low negative symptoms showed significantly greater local interference than patients with high negative and low positive symptoms. Interconnected temporal and frontal systems are postulated to contribute to this pattern of perceptual processing efficiency and distractibility in schizophrenia. (JINS, 1999, 5, 442–451.)