Background: Visual masking paradigms assess the early part of visual information processing, which may reflect vulnerability measures for schizophrenia. We examined the neural substrates of visual backward performance in unaffected sibling of schizophrenia patients using functional magnetic resonance imaging (fMRI). Methods: Twenty-one unaffected siblings of schizophrenia patients and 19 healthy controls performed a backward masking task and three functional localizer tasks to identify three visual processing regions of interest (ROI): lateral occipital complex (LO), the motion-sensitive area, and retinotopic areas. In the masking task, we systematically manipulated stimulus onset asynchronies (SOAs). We analyzed fMRI data in two complementary ways: 1) an ROI approach for three visual areas, and 2) a whole-brain analysis. Results: The groups did not differ in behavioral performance. For ROI analysis, both groups increased activation as SOAs increased in LO. Groups did not differ in activation levels of the three ROIs. For whole-brain analysis, controls increased activation as a function of SOAs, compared with siblings in several regions (i.e., anterior cingulate cortex, posterior cingulate cortex, inferior prefrontal cortex, inferior parietal lobule). Conclusions: The study found: 1) area LO showed sensitivity to the masking effect in both groups; 2) siblings did not differ from controls in activation of LO; and 3) groups differed significantly in several brain regions outside visual processing areas that have been related to attentional or re-entrant processes. These findings suggest that LO dysfunction may be a disease indicator rather than a risk indicator for schizophrenia. © 2010 Society of Biological Psychiatry.