Serotonin type-3 receptor (5-HT3R) antagonists show potential as a treatment for cognitive deficits in schizophrenia. CVN058, a brain-penetrant, potent and selective 5-HT3R antagonist, shows efficacy in rodent models of cognition and was well-tolerated in Phase-1 studies. We evaluated the target engagement of CVN058 using mismatch negativity (MMN) in a randomized, double-blind, placebo-controlled, cross-over study. Subjects were stable outpatients with schizophrenia or schizoaffective disorder treated with antipsychotics. Subjects were not permitted to use other 5-HT3R modulators or serotonin reuptake inhibitors. Each subject received a high (150mg) and low (15mg or 75mg) oral dose of CVN058 and placebo in a randomized order across 3 single-day treatment visits separated by at least 1 week. The primary pre-registered outcome was amplitude of duration MMN. Amplitude of other MMN deviants (frequency, intensity, frequency modulation and location), P50, P300 and auditory steady state response (ASSR) were exploratory endpoints. 19 of 22 randomized subjects (86.4%) completed the study. Baseline PANSS scores indicated moderate impairment. CVN058 150mg led to significant improvement vs. placebo on the primary outcome of duration MMN (p = 0.02, Cohen’s d = 0.48). A significant treatment effect was also seen in a combined analysis across all MMN deviants (p < 0.001, d = 0.57). Effects on location MMN were independently significant (p < 0.007, d = 0.46). No other significant effects were seen for other deviants, doses or EEG measures. There were no clinically significant treatment related adverse effects. These results show MMN to be a sensitive target engagement biomarker for 5-HT3R, and support the potential utility of CVN058 in correcting the excitatory/inhibitory imbalance in schizophrenia. ClinicalTrials.gov Identifier: NCT03669250