A deficit in inhibitory gating of auditory evoked responses was examined in 15 schizophrenic patients, their first-degree relatives, and normal subjects, using a conditioning-testing paradigm with the P50 wave of the auditory evoked response. This paradigm demonstrates inhibition by presenting paired stimuli to the subject; the P50 wave evoked by the second stimulus is reduced because of inhibitory mechanisms activated during the response to the first stimulus. In normal subjects, the mean amplitude of the second P50 response was reduced to less than 20%. In the schizophrenics, the mean amplitude of the second response was more than 85% of the first, a result that replicates our previous finding of a deficit in inhibition in schizophrenia. Approximately half the first-degree relatives, generally including at least one parent, had a similar deficit. Presence of this deficit in the parents was associated with a family history of schizophrenia. Family members with this deficit also had significantly higher scores on several scales of the Minnesota Multiphasic Personality Inventory than did family members without the deficit. Despite the deficit in inhibition, other characteristics of the P50 wave were normal in the relatives, in contrast to unmedicated schizophrenics, who showed additional abnormalities in wave latency and amplitude.