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A hallmark of schizophrenia is impaired proverb interpretation, which could be due to: (1) aberrant activation of disorganized semantic associations, or (2) working memory (WM) deficits. We assessed 18 schizophrenia patients and 18 normal control participants on proverb interpretation, and evaluated these two hypotheses by examining within patients the correlations of proverb interpretation with disorganized symptoms and auditory WM, respectively. Secondarily, we also explored the relationships between proverb interpretation and a spectrum of cognitive functions including auditory sensory-memory encoding (as indexed by the mismatch negativity (MMN) event-related brain potential (ERP)); executive function; and socialoccupational function. As expected, schizophrenia patients produced less accurate and less abstract descriptions of proverbs than did controls. These proverb interpretation difficulties in patients were not significantly correlated with disorganization or other symptom factors, but were significantly correlated (p< .05) with WM impairment, as well as with impairments in sensory-memory encoding, executive function, and socialoccupational function. These results offer no support for disorganized associations in abnormal proverb interpretation in schizophrenia, but implicate WM deficits, perhaps as a part of a syndrome related to generalized frontal cortical dysfunction. (JINS, 2007, 13, 653–663.) [ABSTRACT FROM AUTHOR]