Face processing is crucial to social interaction, but is impaired in schizophrenia patients, who experience delays in face recognition, difficulties identifying others, and misperceptions of affective content. The right fusiform face area plays an important role in the early stages of human face processing and thus may be affected in schizophrenia. The aim of the study was therefore to investigate whether face processing deficits are related to dysfunctions of the right fusiform face area in schizophrenia patients compared with controls. In a rapid, event-related functional magnetic resonance imaging (fMRI) design, we investigated the encoding of new faces, as well as the recognition of newly learned, famous, and unfamiliar faces, in 13 schizophrenia patients and 21 healthy controls. We applied region of interest analysis to each individual's right fusiform face area and tested for group differences. Controls displayed higher blood oxygenation level dependent (BOLD) activation during the memorization of faces that were later successfully recognized. In schizophrenia patients, this effect was not observed. During the recognition task, schizophrenia patients exhibited lower BOLD responses, less accuracy, and longer reaction times to famous and unfamiliar faces. Our results support the hypothesis that impaired face processing in schizophrenia is related to early-stage deficits during the encoding and recognition of faces.