Functional and structural changes in 10 DSM-III-R male schizophrenics and 10 healthy volunteers were investigated using magnetoencephalographically (MEG) detected long-latency (N100 m) auditory evoked fields (AEFs) and magnetic resonance imaging (MRI). The AEFs were characterized by single moving equivalent dipoles, which were superimposed on MRIs. There were significant differences in dipole orientations and in AEF latencies in the left hemisphere of schizophrenics, when compared to the controls. The MEG-detected alterations were found to be associated with a bilateral volume reduction of the posterior superior temporal gyrus (pSTG), which was more pronounced in the left hemisphere. Separate analysis of white and gray matter has shown that the pSTG volume reduction resulted from decreased gray matter volumes without white matter changes. Both the functional and the morphological data indicate a left-hemispheric disturbance in our patients.