Patients with schizophrenia exhibit a decrease or loss of normal anatomical brain asymmetry that also extends to functional levels. We applied functional magnetic resonance imaging (fMRI) to investigate language lateralization in patients with schizophrenia during their first episode of illness, thus excluding effects of chronic illness and treatment. Brain regions activated during language tasks of verb generation and passive music listening were explored in 12 first-episode patients with schizophrenia and 17 healthy controls. Regions of interest corresponded to Broca's area in the inferior frontal gyrus (IFG) and Wernicke's area in the superior temporal sulcus (STS). Patients with schizophrenia had significantly smaller lateralization indices in language-related regions than controls. A similar effect was observed in their IFG and STS regions. There was no difference between the groups in the auditory cortex for the music task. Patients with schizophrenia demonstrated greater activation than the controls in temporal regions: the difference was larger in patients with more severe positive symptom subscores. In conclusion, patients with schizophrenia demonstrated loss of normal functional brain asymmetry, as reflected in diminished lateralization of language-related activation in frontal and temporal regions. This phenomenon was already present during their first episode of psychosis, possibly reflecting developmental brain abnormalities of the illness.