The ratio of magnetoencephalogram-recorded brain responses occurring 50ms after paired clicks (S2-evoked M50/S1-evoked M50) serves as a measure of sensory gating. An abnormally large ratio is commonly found in schizophrenia. Whether this abnormality indicates impaired gating is debated. Using event-related oscillations the present study sought to elucidate processes contributing to the phenomenon of altered M50 gating ratio. Schizophrenia inpatients (n=50) showed the expected large M50 gating ratio relative to 48 healthy controls, which correlated with less induced frontally generated activity in the 10-15Hz frequency band starting 200ms before the onset of S2. Patients also produced smaller alpha (8-12Hz) and gamma (60-80Hz) responses to S1. Results suggest that the deviant gating ratio in schizophrenia is a consequence of a complex alteration in the processing of incoming information that cannot be attributed to impaired gating alone.