Background Cognitive impairments are present during the early course of schizophrenia, and the contribution of GABAergic dysfunction to these cognitive impairments has received increasing attention. Cortical GABAergic inhibition can be assessed using short-interval intracortical inhibition (SICI) in a paired-pulse transcranial magnetic stimulation (ppTMS). The aim of this study was to examine the relationship between cortical GABAergic inhibition and cognitive function in recent onset schizophrenia patients using ppTMS and a neuropsychological battery. Methods The subjects were 20 healthy controls (HC group) and 20 patients with schizophrenia whose duration of illness was less than three years (SZ group). All subjects underwent ppTMS measurements of SICI and intracortical facilitation (ICF), and cognitive performance of the SZ group was assessed using the Brief Assessment of Cognition in Schizophrenia Japanese-language version. We examined group differences in ppTMS measurements (resting motor threshold, SICI, and ICF). In the SZ group, we assessed the relationship between SICI and cognitive performance, and the relationships between SICI and age, duration of illness, medications, and psychopathology. Results The SZ group showed a significant reduction of SICI compared to the HC group, and demonstrated a significant correlation between the reduction of SICI and impaired performance of a working memory task. The HC and the SZ groups did not differ significantly in resting motor threshold and ICF. The SZ group did not show any significant correlations between SICI and age, duration of illness, medications, or psychopathology. Conclusions Our results suggest that the reduction of cortical GABAergic inhibition is related to impairment of working memory in patients with recent onset schizophrenia.