Impaired prepulse inhibition of the startle reflex (PPI) in schizophrenia has been replicated in many studies. However, previous results may have been influenced by course of illness, and antipsychotic medication. Studies on antipsychotic-naive, first-episode schizophrenia patients are lacking, since these patients are so difficult to recruit. Furthermore, longitudinal studies are few, and their results are inconsistent: some results indicating a reduction of PPI deficits by treatment with atypical antipsychotics, while others do not. This study reports on PPI, habituation and sensitization of the human startle reflex in a large group of antipsychotic-naive, first-episode schizophrenia patients, and the effect of subsequent treatment with quetiapine. Thirty-four antipsychotic-naive, first-episode schizophrenia patients (24 males, 10 females), and age- and gender-matched healthy controls were tested in a psychophysiological test battery at baseline and again after 6 months. During this period, the patients were treated with quetiapine, while the controls received no treatment. Sixteen patients completed the study. At baseline, male patients showed significantly lower PPI than controls. Treatment with quetiapine for 6 months increased male PPI to a level where it was no longer statistically different from the controls. The much smaller group of females did not show PPI deficits at baseline. In addition, compared to controls, patients appeared highly aroused and showed a strong yet non-significant trend for reduced sensitization at baseline, but not at follow-up. Patients and controls showed similar levels of habituation, both at baseline, and at follow-up. These findings indicate that PPI deficits are already present from the earliest stage of clinical onset of schizophrenia, before the patients have received any antipsychotic treatment. In addition, following 6 months’ treatment with quetiapine these PPI deficits were normalized. Furthermore, the results suggest that schizophrenia patients in the antipsychotic-naive state show reduced levels of sensitization, yet normal levels of habituation.