We aimed to clarify the importance of early visual processing deficits for the formation of cognitive deficits in the schizophrenia spectrum. We carried out an event-related potential (ERP) study using a computerised delayed matching to sample working memory (WM) task on a sample of volunteers with high and low scores on the Schizotypal Personality Questionnaire (SPQ). The amplitudes of the visual ERPs to the encoding and retrieval stimuli in the task were measured using the BESA software. The hypothesis was that the high schizotypes would have deficits in early visual processing (reduced P1 amplitude) and working memory similar to those observed in schizophrenia. The high schizotypy group identified fewer previously encoded target cues than the low schizotypy group in the WM task and their mean cue-evoked P1 amplitudes were significantly reduced, both in the encoding and the retrieval phases of the task. Accuracy on the WM task correlated with the P1 amplitude. None of the later components (N1 and P2) were significantly different between the groups, nor were there differences in performance on the CANTAB tests. The results are compatible with the hypothesis that trait vulnerability to schizophrenia is associated with impaired early visual processing which may contribute to impaired cognitive memory performance. However, the high schizotypes are apparently able to compensate for the visual processing deficits and perform normally when stimuli are presented for longer as in the CANTAB tasks. This study adds to growing evidence that the schizophrenia spectrum is characterized by early sensory abnormalities. (Contains 3 tables and 7 figures.)