Reward detection, surprise detection and prediction-error signaling have all been proposed as roles for the ventral striatum (vStr). Previous neuroimaging studies of striatal function in schizophrenia have found attenuated neural responses to reward-related prediction errors; however, as prediction errors represent a discrepancy in mesolimbic neural activity between expected and actual events, it is critical to examine responses to both expected and unexpected rewards (URs) in conjunction with expected and UR omissions in order to clarify the nature of ventral striatal dysfunction in schizophrenia. In the present study, healthy adults and people with schizophrenia were tested with a reward-related prediction-error task during functional magnetic resonance imaging to determine whether schizophrenia is associated with altered neural responses in the vStr to rewards, surprise prediction errors or all three factors. In healthy adults, we found neural responses in the vStr were correlated more specifically with prediction errors than to surprising events or reward stimuli alone. People with schizophrenia did not display the normal differential activation between expected and URs, which was partially due to exaggerated ventral striatal responses to expected rewards (right vStr) but also included blunted responses to unexpected outcomes (left vStr). This finding shows that neural responses, which typically are elicited by surprise, can also occur to well-predicted events in schizophrenia and identifies aberrant activity in the vStr as a key node of dysfunction in the neural circuitry used to differentiate expected and unexpected feedback in schizophrenia.