Schizophrenia patients exhibit deficits on visual processing tasks, including visual backward masking, and these impairments are related to deficits in higher-level processes. In the current study we used electroencephalography techniques to examine successive stages and pathways of visual processing in a specialized masking paradigm, four-dot masking, which involves masking by object substitution. Seventy-six schizophrenia patients and 66 healthy controls had event-related potentials (ERPs) recorded during four-dot masking. Target visibility was manipulated by changing stimulus onset asynchrony (SOA) between the target and mask, such that performance decreased with increasing SOA. Three SOAs were used: 0, 50, and 100 ms. The P100 and N100 perceptual ERPs were examined. Additionally, the visual awareness negativity (VAN) to correct vs. incorrect responses, an index of reentrant processing, was examined for SOAs 50 and 100 ms. Results showed that patients performed worse than controls on the behavioral task across all SOAs. The ERP results revealed that patients had significantly smaller P100 and N100 amplitudes, though there was no effect of SOA on either component in either group. In healthy controls, but not patients, N100 amplitude correlated significantly with behavioral performance at SOAs where masking occurred, such that higher accuracy correlated with a larger N100. Healthy controls, but not patients, exhibited a larger VAN to correct vs. incorrect responses. The results indicate that the N100 appears to be related to attentional effort in the task in controls, but not patients. Considering that the VAN is thought to reflect reentrant processing, one interpretation of the findings is that patients' lack of VAN response and poorer performance may be related to dysfunctional reentrant processing.