Smooth-pursuit eye movements are the essential tool for a clear and stable visual perception of our environment by matching eye velocity to the velocity of moving objects. However, in about 50% of schizophrenic patients, this ability is disturbed. To reveal the cortical mechanisms that underlie this deficit, eye velocity-related neuronal activity was analyzed by functional magnetic resonance imaging (fMRI). Blocks of constant velocity ramps (10 degrees/s) were presented to 17 patients with schizophrenia and 16 matched controls while assessing smooth-pursuit velocity (SPV) during scanning sessions. Using random-effects analysis, the parametric modulation of brain hemodynamic responses related to SPV was compared between both groups. In schizophrenic patients, reduced SPV was significantly correlated with a focal decrease of the hemodynamic response in the V5 complex (t = 4.21, P(FWE-corrected) = 0.005). Our results provide direct evidence for reduced neuronal activity in V5 as one major factor underlying abnormal SPV in schizophrenia and suggest impaired motion perception. They confirm hypotheses about a V5 deficit derived from psychophysiological studies with schizophrenic patients in which deficient motion perception (especially velocity discrimination) was associated with impaired smooth-pursuit performance.