Background Schizophrenia cases have been consistently shown to have behavioural and neurofunctional abnormalities but studies during early course are scarce. The present work assesses the performance of acute first episode schizophrenia cases on correlation of a facial emotion perception task with brain function using fluorine-18 fluorodeoxyglucose (FDG) positron emission tomography (PET). Methods Twenty First episode schizophrenia cases and 20 matched healthy controls living in the community were enrolled. For cases, longest duration of illness was one year and treatment with neuroleptic did not exceed two weeks on the day of scan. To measure facial emotion perception (FEP) both groups were administered the Emotion battery from the Penn Computerized Battery followed by PET acquisition. SPM 8 analysis for group differences at p <0.001 was performed. Results Schizophrenia subjects showed hypoactivation of bilateral prefrontal cortices and fusiform gyrii, with significant hyperactivation of bilateral basal ganglia and left precuneus. Positive correlation of metabolism in prefrontal cortex and performance indices on emotions domain was seen. No correlation of chlorpromazine equivalent days with metabolism in basal ganglia was observed. Conclusions The performance of schizophrenia cases on FEP task was significantly impaired in comparison to the control group. Brain regions implicated in emotion processing showed hypometabolism in cases as compared to controls. Failure of schizophrenia cases to optimally recruit brain circuitry may be contributing to deficits on FEP task. These findings suggest inherent deficits in neural circuitry of emotion processing in schizophrenia; devoid of confounding effects of neuroleptics and duration of illness.