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Schizophrenia is characterized by significant and widespread impairments in the regulation of emotion. Evidence is only recently emerging regarding the neural basis of these emotion regulation impairments, and few studies have focused on the regulation of emotion during effortful cognitive processing. To examine the neural correlates of deficits in effortful emotion regulation, schizophrenia outpatients (N = 20) and age- and gender-matched healthy volunteers (N = 20) completed an emotional faces n-back task to assess the voluntary attentional control subprocess of emotion regulation during functional magnetic resonance imaging. Behavioral measures of emotional intelligence and emotion perception were administered to examine brain-behavior relationships with emotion processing outcomes. Results indicated that patients with schizophrenia demonstrated significantly greater activation in the bilateral striatum, ventromedial prefrontal, and right orbitofrontal cortices during the effortful regulation of positive emotional stimuli, and reduced activity in these same regions when regulating negative emotional information. The opposite pattern of results was observed in healthy individuals. Greater fronto-striatal response to positive emotional distractors was significantly associated with deficits in facial emotion recognition. These findings indicate that abnormalities in striatal and prefrontal cortical systems may be related to deficits in the effortful emotion regulatory process of attentional control in schizophrenia, and may significantly contribute to emotion processing deficits in the disorder.