Background: Impairment in episodic memory is one of the most robust findings in schizophrenia. Disruptions of fronto-temporal functional connectivity that could explain some aspects of these deficits have been reported. Recent work has identified abnormal hippocampal function in unmedicated patients with schizophrenia (SZ), such as increased metabolism and glutamate content that are not always seen in medicated SZ. For these reasons, we hypothesized that altered fronto-temporal connectivity might originate from the hippocampus and might be partially restored by antipsychotic medication. Methods: Granger causality methods were used to evaluate the effective connectivity between frontal and temporal regions in 21 unmedicated SZ and 20 matched healthy controls (HC) during performance of an episodic memory retrieval task. In 16 SZ, effective connectivity between these regions was evaluated before and after 1-week of antipsychotic treatment. Results: In HC, significant effective connectivity originating from the right hippocampus to frontal regions was identified. Compared to HC, unmedicated SZ showed significant altered fronto-temporal effective connectivity, including reduced right hippocampal to right medial frontal connectivity. After 1-week of antipsychotic treatment, connectivity more closely resembled the patterns observed in HC, including increased effective connectivity from the right hippocampus to frontal regions. Conclusions: These results support the notion that memory disruption in schizophrenia might originate from hippocampal dysfunction and that medication restores some aspects of fronto-temporal dysconnectivity. Patterns of fronto-temporal connectivity could provide valuable biomarkers to identify new treatments for the symptoms of schizophrenia, including memory deficits. Hum Brain Mapp 36:1442-1457, 2015.