Schizophrenia is characterized by social interaction deficits contributing to poor functional outcome. Hand gesture use is particularly impaired, linked to frontal lobe dysfunction and frontal grey matter deficits. The functional neural correlates of impaired gesturing are currently unclear. We therefore investigated aberrant brain activity during impaired gesturing in schizophrenia. We included 22 patients with schizophrenia and 25 healthy control participants matched for age, gender, and education level. We obtained functional magnetic resonance imaging data using an event-related paradigm to assess brain activation during gesture planning and execution. Group differences in whole brain effects were calculated using factorial designs. Gesture ratings were performed by a single rater, blind to diagnoses and clinical presentation. During gesture planning and execution both groups activated brain areas of the praxis network. However, patients had reduced dorsolateral prefrontal cortex (DLPFC) and increased inferior parietal lobe (IPL) activity. Performance accuracy was associated with IPL activity in patients. Furthermore, patients activated temporal poles, amygdala and hippocampus during gesture planning, which was associated with delusion severity. Finally, patients demonstrated increased dorsomedial prefrontal cortex activity during planning of novel gestures. We demonstrate less prefrontal, but more IPL and limbic activity during gesturing in schizophrenia. IPL activity was associated with performance accuracy, whereas limbic activity was linked to delusion severity. These findings may reflect impaired social action planning and a limbic interference with gestures in schizophrenia contributing to poor gesture performance and consequently poor social functioning in schizophrenia.