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Motivated by the potential of objective neurophysiological markers to index thalamocortical function in patients with severe psychiatric illnesses, we comprehensively characterized key NREM sleep parameters across multiple domains, their interdependencies, and their relationship to waking event-related potentials and symptom severity. In 130 schizophrenia (SCZ) patients and controls, we confirmed a marked reduction in sleep spindle density in SCZ and extended these findings to show that only slow spindles predicted symptom severity, and that fast and slow spindle properties were largely uncorrelated. We also describe a novel measure of slow oscillation and spindle interaction that was attenuated in SCZ. The main sleep findings were replicated in a demographically distinct sample, and a joint model, based on multiple NREM components, predicted disease status in the replication cohort. Although also altered in patients, auditory event-related potentials elicited during wake were unrelated to NREM metrics. Consistent with a growing literature implicating thalamocortical dysfunction in SCZ, our characterization identifies independent NREM and wake EEG biomarkers that may index distinct aspects of SCZ pathophysiology and point to multiple neural mechanisms underlying disease heterogeneity. This study lays the groundwork for evaluating these neurophysiological markers, individually or in combination, to guide efforts at treatment and prevention as well as identifying individuals most likely to benefit from specific interventions.