Previous studies, mostly involving neuroleptic-treated patients, have suggested enlarged basal ganglia size in schizophrenia. The authors sought to examine basal ganglia volume in neuroleptic-naive psychotic patients. Magnetic resonance imaging volumetric studies were conducted in newly diagnosed neuroleptic-naive schizophrenic and nonschizophrenic psychotic patients and in matched healthy comparison subjects. Both patient groups had bilaterally reduced caudate, but not putamen, volumes, compared to the healthy subjects, after adjustment for intracranial volume. Decreases in caudate volume in newly diagnosed psychotic patients may be related to the primary pathophysiology of these disorders; prior observations of increased caudate volume may reflect effects of neuroleptic treatment.