Background Studies have shown that individuals with schizophrenia suffer from memory impairments. In this study, we combined proton magnetic resonance spectroscopy (1H-MRS) and functional magnetic resonance imaging (fMRI) to clarify the neurobiology of memory deficits in schizophrenia. Methods We used single-voxel MRS acquired in the left hippocampus and fMRI during performance of a memory task to obtain measures of neurochemistry and functional response in 28 stable, medicated participants with schizophrenia (SZ) and 28 matched healthy controls (HC). Results The SZ group had significantly decreased blood oxygen level-dependent (BOLD) signal in left inferior frontal gyrus (IFG) during encoding and in the anterior cingulate cortex (ACC) and superior temporal gyrus (STG) during retrieval. We did not find significant differences in N-acetylaspartate/creatine (NAA/Cr) or glutamate+glutamine (Glx/Cr) levels between the groups, but did find a significant positive correlation between NAA/Cr and Glx/Cr in the HC group that was absent in the SZ group. There were no significant correlations between BOLD and MRS measured in the hippocampus. Further analyses revealed a negative correlation between left IFG BOLD and task performance in the SZ group. Finally, in the HC group, the left IFG BOLD was positively correlated with Glx/Cr. Conclusions We replicated findings of reduced BOLD signal in left IFG and of an altered relationship between IFG BOLD response and task performance in the SZ. The absence of correlation between NAA/Cr and Glx/Cr levels in patients might suggest underlying pathologies of the glutamate–glutamine cycle and/or mitochondria.