This research was designed to provide data on whether thought disorder in schizophrenia patients is due to difficulty in holding external stimuli or the external context online in working memory. We assessed 231 early phase acute inpatients, including 68 schizophrenic patients and 38 bipolar manic patients. Patients were administered a thought disorder test that requires holding stimuli online in working memory as they respond and another in which the stimuli is in direct view of the patients throughout the test procedure. The results indicated that patients who were thought disordered on the test requiring holding the external stimuli online in memory also were more thought disordered on the test that provides full vision of the stimuli throughout the testing (p < 0.001). Thus, schizophrenia patients vulnerable to thought disorder show thought disorder regardless of whether or not they are required to hold the stimuli online in memory. Overall, the data did not support the formulation that thought disorder is primarily a consequence of failure to hold external stimuli or contextual material online in working memory. An alternate view of thought disorder is presented.