Controversy exists as to the cause of disturbed prepulse inhibition (PPI) in patients with schizophrenia. This study aimed to clarify the nature of PPI in schizophrenia using improved methodology. Startle and PPI were measured in 44 patients with schizophrenia and 32 controls across a range of startling stimulus intensities under two conditions, one while participants were attending to the auditory stimuli (ATTEND condition) and one while participants completed a visual task in order to ensure they were ignoring the auditory stimuli (IGNORE condition). Patients showed reduced PPI of RMAX (reflex capacity) and increased PPI of Hillslope (reflex efficacy) only under the INGORE condition, and failed to show the same pattern of attentional modulation of the reflex parameters as controls. In conclusion, disturbed PPI in schizophrenia appears to result from deficits in selective attention, rather than from preattentive dysfunction.