Individuals with schizophrenia use twice as much caffeine on average when compared to healthy controls. Knowing the high rates of consumption, and the potential negative effects of such, it is important we understand the cortical mechanisms that underlie caffeine use, and the consequences of caffeine use on neural circuits in this population. Using a randomized, placebo controlled, double-blind, repeated measures design, the current study examines caffeine's effects on resting electroencephalography (EEG) power in those who have been recently diagnosed with schizophrenia (SZ) compared to regular-using healthy controls (HC). Correlations between average caffeine consumption, withdrawal symptoms, drug related symptoms and clinical psychosis symptoms were measured and significant correlations with neurophysiological data were examined. Results showed caffeine had no effect on alpha asymmetry in the SZ group, although caffeine produced a more global effect on the reduction of alpha2 power in the SZ group. Further, those with more positive symptoms were found to have a greater reduction in alpha2 power following caffeine administration. Caffeine also reduced beta power during eyes closed and eyes open resting in HC, but only during eyes closed resting conditions in the SZ group. These findings provide a descriptive profile of the resting EEG state following caffeine administration in individuals with schizophrenia. The findings ultimately suggest caffeine does not affect alpha or beta power as readily in this population and a higher dose may be needed to achieve the desired effects, which may elucidate motivational factors for high caffeine use.