There are several reports that performance-based measures as well as symptom ratings improve with clozapine in patients with schizophrenia who previously responded poorly to typical neuroleptic treatment. It is not clear whether improved cognitive function following initiation of clozapine is simply related to relief of psychotic symptoms and extrapyramidal side-effects associated with prior use of typical neuroleptics, or reflects another dimension of the greater efficacy of clozapine compared with typical neuroleptics. To elucidate this issue and better specify the cognitive changes associated with use of clozapine, the authors have assessed cognitive function psychometrically and using event-related potentials (ERPs), pre- and 8–12 wk post-initiation of clozapine treatment. Patients were rated on the BPRS, the SAPS and the SANS and completed a number of tests tapping aspects of frontal lobe function. ERP recordings were conducted using an auditory task twice, which was repeated under passive and active attention conditions. It was found that clozapine differentially affects tests reflecting executive and planning function, and not stimulus-driven cognitive functions. The results were not consistent with the hypothesis that these effects were simply due to relief of medication side-effects but could be related to the D1 receptor antagonist actions of clozapine.