Magnetoencephalography (MEG) is an electrophysiologic brain imaging technology that has been applied to the study of mental illness, particularly schizophrenia. Like electroencephalography, it provides excellent temporal resolution, and in combination with magnetic resonance imaging, can also provide good spatial resolution. Studies of the auditory system in schizophrenia using MEG have demonstrated an abnormality in functional cerebral asymmetry, in which persons with schizophrenia typically show reduced, or reversed, cerebral asymmetry compared with normal subjects. This abnormality is sex-specific; it is more pronounced in males with schizophrenia. These findings have not been demonstrated using other neuroimaging strategies. Thus, MEG appears to offer a unique and valuable contribution to psychiatric neuroimaging. Current research and clinical applications of MEG are limited, however, by the high cost of instrumentation. The cost of MEG systems should improve as more applications are developed, in schizophrenia as well as other neuropsychiatric conditions, and hospitals begin to invest in the technology.