MRI diffusion tensor imaging (DTI), optimized for measuring the trace of the diffusion tensor, was used to investigate microstructural changes in the brains of 12 individuals with schizophrenia compared with 12 matched control subjects. To control for the effects of anatomic variation between subject groups, all participants' diffusion images were nonlinearly registered to standard anatomical space. Significant statistical differences in mean diffusivity (MD) measures between the two groups were determined on a pixel-by-pixel basis, using Gaussian random field theory. We found significantly elevated MD measures within temporal, parietal and prefrontal cortical regions in the schizophrenia group (P> 0.001), especially within the medial frontal gyrus and anterior cingulate. The dorsal medial and anterior nucleus of the thalamus, including the caudate, also exhibited significantly increased MD in the schizophrenia group (P> 0.001). This study has shown for the first time that MD measures offer an alternative strategy for investigating altered prefrontal–thalamic circuitry in schizophrenia.