Origins of impaired adaptive functioning in schizophrenia remain poorly understood. Behavioral disorganization may arise from an abnormal reliance on common combinations between concepts stored in semantic memory. Avolition-apathy may be related to deficits in using goal-related requirements to flexibly plan behavior. The authors recorded event-related potentials (ERPs) in 16 patients with medicated schizophrenia and 16 healthy controls in a novel video paradigm presenting congruous or incongruous objects in real-world activities. All incongruous objects were contextually inappropriate, but the incongruous scenes varied in comprehensibility. Psychopathology was assessed with the Scales for the Assessment of Positive and Negative Symptoms (SAPS/SANS) and the Brief Psychiatric Rating Scale. In patients, an N400 ERP, thought to index activity in semantic memory, was abnormally enhanced to less comprehensible incongruous scenes, and larger N400 priming was associated with disorganization severity. A P600 ERP, which may index flexible object-action integration based on goal-related requirements, was abnormally attenuated in patients, and its smaller magnitude was associated with the SANS rating of impersistence at work or school (goal-directed behavior). Thus, distinct neurocognitive abnormalities may underlie disorganization and goal-directed behavior deficits in schizophrenia.