Deficits in language comprehension in schizophrenia were examined using event-related potentials (ERPs). Schizophrenic and healthy participants read sentences in which the first clause ended with a homograph, and the second clause started with a target word that was semantically related to the homograph's dominant meaning (e.g., 1. Diving was forbidden from the bridge because the river had rocks in it. or 2. The guests played bridge because the river had rocks in it.). Processing of the targets (e.g., “river”) was expected to be primarily influenced by the preceding overall sentence context (congruent in 1; incongruent in 2) in healthy participants, but to be inappropriately affected by the dominant meaning of homographs (e.g., the “structure” meaning of “bridge”) in sentences like 2 in schizophrenic patients. The N400 ERP component that is known to be sensitive to contextual effects during language processing confirmed these predictions. This showed that language abnormalities in schizophrenia may be related to deficient processing of context-irrelevant semantic representations of words from the discourse.