Previous neuroimaging studies of working memory (WM) in schizophrenia have generated conflicting findings of hypo- and hyper-frontality, discrepancies potentially driven by differences in task difficulty and/or performance. This study proposes and tests a new model of the performance-activation relationship in schizophrenia by combining changes by load with overall individual differences in performance. Fourteen patients with recent-onset schizophrenia and eighteen controls underwent functional magnetic resonance imaging while performing a parametric verbal WM task. Group level differences followed a linear "cross-over" pattern, such that in controls, activation in the dorsolateral prefrontal cortex (DLPFC) increased as performance decreased, while patients showed the opposite. Overall, low performing patients were hypoactive and high performing patients hyperactive relative to controls. However, patients and controls showed similar functions of activation by load in which activation rises with task difficulty but levels off or slightly decreases at higher loads. Moreover, across all loads and at their own WM capacity, higher performing patients showed greater DLPFC activation than controls, while lower performing patients activated least. This study establishes a novel framework for predicting the relationship between functional activation and WM performance by combining changes of activation by WM load occurring within each subject with the overall differences in activation associated with general WM performance. Essentially, increasing task difficulty correlates asymptotically with increasing activation in all subjects, but depending on their behavioral performance, patients show overall hyper- versus hypofrontality, a pattern potentially derived from individual differences in underlying cellular changes that may relate to levels of functional disability.