The left superior temporal cortex, which supports linguistic functions, has consistently been reported to activate during auditory-verbal hallucinations in schizophrenia patients. It has been suggested that auditory hallucinations and the processing of normal external speech compete for common neurophysiological resources. We tested the hypothesis of a negative relationship between the clinical severity of hallucinations and local brain activity in posterior linguistic regions while patients were listening to external speech. Fifteen right-handed patients with schizophrenia and daily auditory hallucinations for at least 3 months were studied with event-related fMRI while listening to sentences in French or to silence. Severity of hallucinations, assessed using the auditory hallucination subscales of the Psychotic Symptom Rating Scales (PSYRATS) and of the Scale for the Assessment of Positive Symptoms (SAPS-AH), negatively correlated with activation in the left temporal superior region in the French minus silence condition. This finding supports the hypothesis that auditory hallucinations compete with normal external speech for processing sites within the temporal cortex in schizophrenia.