Studies on working memory (WM) dysfunction in schizophrenia have reported several functionally aberrant brain areas including prefrontal and temporal cortex. Longitudinal studies have shown changes in prefrontal activation during treatment. We used event-related functional magnetic resonance imaging and a parametric verbal WM task to investigate cerebral function during WM performance in healthy subjects and medicated patients with schizophrenia with an acute symptom exacerbation. Patients were scanned twice: within the first week after admission to the hospital and after 7–8 weeks of a multimodal treatment including atypical antipsychotic agents. There were no differences in activation of lateral prefrontal regions in patients relative to healthy controls neither at baseline nor after 7–8 weeks. Controls showed relatively more activation in parietal, striatal and cerebellar regions. In patients with schizophrenia, frontotemporal function was bilaterally enhanced after 7–8 weeks. This activation change was associated with improved accuracy in a verbal WM task, improved verbal WM-span and symptom reduction as measured by the BPRS global score and the BPRS factor for thought disturbance. Although we could not replicate findings of functional hypofrontality in the patients with schizophrenia, frontotemporal activation changed with treatment and was associated with verbal WM performance and significant reduction of psychopathology.