Thought disorder in schizophrenia may involve abnormal semantic activation or faulty working memory maintenance. Event-related potentials (ERPs) were recorded while sentences reading “THE NOUN WAS ADJECTIVE/VERB” were presented to 34 schizophrenic and 34 control subjects. Some nouns were homographs with dominant and subordinate meanings. Their sentence ending presented information crucial for interpretation (e.g., The bank was [closed, steep]). Greatest N400 activity to subordinate homograph-meaning sentence endings in schizophrenia would reflect a semantic bias to strong associates. N400 to all endings would reflect faulty verbal working memory maintenance. Schizophrenic subjects showed N400 activity to all endings, suggesting problems in contextual maintenance independent of content, but slightly greater N400 activity to subordinate endings that correlated with the severity of psychosis. Future research should help determine whether a semantic activation bias in schizophrenia toward strong associates is reflected in ERP activity or whether this effect is overshadowed by faulty verbal working memory maintenance of context.