Evidence that deficits in early auditory processing occur in schizophrenia was first provided by an ERP study demonstrating that mismatch negativity (MMN) to duration increments is reduced in medicated patients. Our subsequent research, which is reviewed in this paper, demonstrates that duration MMN reduction cannot be attributed to neuroleptic medication, and is specific to schizophrenia. It is not dependent upon the nature of the task used to distract attention away from the auditory modality. Most importantly, a reduced duration MMN in schizophrenia is a replicable result, having been observed in multiple independently-selected groups of patients from two separate laboratories. It also occurs in unaffected first-degree relatives of patients, suggesting that it may be a vulnerability marker of the disorder. The most intriguing questions however, relate to what underpins the reduced MMN to duration increments in schizophrenia and therefore, what it reveals about the nature of the auditory system deficit in this disorder. Three hypotheses are considered here: a pervasive problem in auditory sensory memory; a specific impairment in duration processing; or an abnormality within the window of temporal integration, coincident with the early phase of auditory sensory memory. Our data so far offer preliminary support for the third hypothesis only, although the possibility of a more broadly defined deficit in temporal processing restricted to brief or rapidly-presented auditory stimuli is canvassed.