Cognitive models propose that auditory verbal hallucinations arise through inner speech misidentification. However, such models cannot explain why the voices in hallucinations often have identities different from the hearer. This study investigated whether a general voice identity recognition difficulty might be present in schizophrenia and related to auditory verbal hallucinations. Twenty-five schizophrenia patients and 13 healthy controls were tested on recognition of famous voices. Signal detection theory was used to calculate perceptual sensitivity and response criterion measures. Schizophrenia patients obtained fewer hits and had lower perceptual sensitivity to detect famous voices than healthy controls did. There were no differences between groups in false alarm rate or response criterion. A symptom-based analysis demonstrated that especially those patients with auditory verbal hallucinations performed poorly in the task. The results indicate that patients with hallucinations are impaired at voice identity recognition because of decreased sensitivity, which may result in inner speech misidentification.