A Val66Met single-nucleotide polymorphism (SNP) in the brain-derived neurotrophic factor (BDNF) gene impairs activity-dependent BDNF release in cultured hippocampal neurons and predicts impaired memory and exaggerated basal hippocampal activity in healthy humans. Several clinical genetic association studies along with multi-modal evidence for hippocampal dysfunction in schizophrenia indirectly suggest a relationship between schizophrenia and genetically determined BDNF function in the hippocampus. To directly test this hypothesized relationship, we studied 47 medication-free patients with schizophrenia or schizoaffective disorder and 74 healthy comparison individuals with genotyping for the Val66Met SNP and [15O]H2O positron emission tomography (PET) to measure resting and working memory-related hippocampal regional cerebral blood flow (rCBF). In patients, harboring a Met allele was associated with significantly less hippocampal rCBF. This finding was opposite to the genotype effect seen in healthy participants, resulting in a significant diagnosis-by-genotype interaction. Exploratory analyses of interregional resting rCBF covariation revealed a specific and significant diagnosis-by-genotype interaction effect on hippocampal-prefrontal coupling. A diagnosis-by-genotype interaction was also found for working memory-related hippocampal rCBF change, which was uniquely attenuated in Met allele-carrying patients. Thus, both task-independent and task-dependent hippocampal neurophysiology accommodates a Met allelic background differently in patients with schizophrenia than in control subjects. Potentially consistent with the hypothesis that cellular sequelae of the BDNF Val66Met SNP interface with aspects of schizophrenic hippocampal and frontotemporal dysfunction, these results warrant future investigation to understand the contributions of unique patient trait or state variables to these robust interactions.