Atypical antipsychotic agents are a frequently and effectively used treatment in schizophrenia and psychotic disorders. Other than conventional antipsychotics, which mainly exert their pharmacological effect in subcortical dopaminergic systems, atypical antipsychotics additionally affect partly serotonergically innervated structures within prefrontal areas, such as the anterior cingulate cortex (ACC). However, only few controlled, randomized studies have so far investigated direct and indirect effects of atypical antipsychotics on the ACC and, up until now, no clinical investigation has exclusively addressed the specific effects of quetiapine on ACC function. The present study assessed ACC function in 18 quetiapine-medicated patients and 13 flupentixol-treated patients suffering from schizophrenia by means of the error-related negativity (ERN), a neurophysiological marker of ACC function, in a pre-post design. Between-group comparisons revealed different effects of quetiapine and flupentixol on ACC function despite similar improvement in psychopathology, cognitive performance and quality of life. Whereas atypical treatment was associated with an increase in amplitudes over time, there were prolonged ERN peak latencies in patients treated with the typical agent. Moreover, treatment effects depended on baseline prefrontal cortex function in both groups. We conclude that both flupentixol and quetiapine improve prefrontal function especially in patients with weak initial ACC function which might be due to their shared affinity for serotonin receptors in frontal brain regions. However, since this affinity is more pronounced for quetiapine, patients treated with quetiapine seemed to profit more evidently concerning their prefrontal cortex function compared to patients of the flupentixol group, who exhibited a compensatory prolongation of processes.