Cognitive control is supported by a neural network that includes the dorsolateral prefrontal cortex (DLPFC) and the anterior cingulate cortex and adjacent medial wall (ACC). DLPFC appears to represent and maintain context to guide actions, while ACC monitors actions and engages DLPFC when increased control is needed. Studies completed during the previous funding period contributed to the development of this model and provided evidence for deficits in both aspects of cognitive control in schizophrenia that are present at the first episode (FE). These results have also suggested a degree of specificity for these functional alterations in frontal cognitive control systems that, if confirmed, could have imortant clinical implications. First, we found evidence that DLPFC context processing deficits are specific to schizophrenia compared to other psychoses, and are also seen in unaffected relatives of schizophrenia patients, suggesting that they are a vulnerability marker or putative endophenotype. Second, we found initial evidence that schizophrenia patients, but not their unaffected relatives have impaired ACC monitoring functions, suggesting that ACC deficits reflect the development of psychosis, an illness marker. In this renewal we will build upon this initial work in several novel ways. Using a theoretically motivated, multimodal imaging approach we will obtain behavioral, fMRI and cognitively induced gamma band (40 Hz) synchrony measures during context processing performance in FE patients with and without schizophrenia (Aim 1) and in the unaffected relatives of schizophrenia patients (Aim 2). In doing so we will test the novel hypothesis that impaired DLPFC context processing associated with risk for schizophrenia reflects impaired thalamo cortical connectivity and/or alterations in local RFC circuits involved in establishing and maintaining high frequency oscillations. Aims 1 and 2 will also use convergent behavioral, fMRI and ERP methods to examine the diagnostic and illness specificity of ACC abnormalities in schizophrenia and unaffected relatives and test the hypothesis that impaired ACC conflict processing is an illness marker in schizophrenia. Successful completion of these Aims will address important clinical challenges related to the application of non-invasive functional imaging to the early diagnosis of schizophrenia. It will also provide new insights into the pathophysiology and new targets for the treatment of impaired cognition in schizophrenia.