Growing evidence suggests that abnormalities in the synchronized oscillatory activity of neurons in schizophrenia may lead to impaired neural activation and temporal coding and thus lead to neurocognitive dysfunctions, such as deficits in facial affect recognition. To gain an insight into the neurobiological processes linked to facial affect recognition, we investigated both induced and evoked oscillatory activity by calculating the Event Related Spectral Perturbation (ERSP) and the Inter Trial Coherence (ITC) during facial affect recognition. Fearful and neutral faces as well as nonface patches were presented to 24 patients with schizophrenia and 24 matched healthy controls while EEG was recorded. The participants’ task was to recognize facial expressions. Because previous findings with healthy controls showed that facial feature decoding was associated primarily with oscillatory activity in the theta band, we analyzed ERSP and ITC in this frequency band in the time interval of 140–200 ms, which corresponds to the N170 component. Event-related theta activity and phase-locking to facial expressions, but not to nonface patches, predicted emotion recognition performance in both controls and patients. Event-related changes in theta amplitude and phase-locking were found to be significantly weaker in patients compared with healthy controls, which is in line with previous investigations showing decreased neural synchronization in the low frequency bands in patients with schizophrenia. Neural synchrony is thought to underlie distributed information processing. Our results indicate a less effective functioning in the recognition process of facial features, which may contribute to a less effective social cognition in schizophrenia.