Processing speed is the most impaired neuropsychological domain in schizophrenia and a robust predictor of functional outcome. Determining the specific cognitive operations underlying processing speed dysfunction and identifying their neural correlates may assist in developing pro-cognitive interventions. Response selection, the process of mapping stimuli onto motor responses, correlates with neuropsychological tests of processing speed and may contribute to processing speed impairment in schizophrenia. This study investigated the relationship between behavioral and neural measures of response selection, and a neuropsychological index of processing speed in schizophrenia. Twenty-six patients with schizophrenia and 21 healthy subjects underwent functional magnetic resonance imaging scanning during performance of two- and four-choice reaction time (RT) tasks and completed the Wechsler Adult Intelligence Scale-III (WAIS) Processing Speed Index (PSI). Response selection, defined as RT slowing between two- and four-choice RT, was impaired in schizophrenia and correlated with psychometric processing speed. Greater activation of the dorsolateral prefrontal cortex (PFC) was observed in schizophrenia and correlated with poorer WAIS PSI scores. Deficient response selection and abnormal recruitment of the dorsolateral PFC during response selection contribute to processing speed impairment in schizophrenia. Interventions that improve response selection and normalize dorsolateral PFC function may improve processing speed in schizophrenia.