Background: Impairments in mismatch negativity (MMN) generation have been consistently reported in patients with schizophrenia. However, underlying oscillatory activity of MMN deficits in schizophrenia and the relationship with cognitive impairments have not been investigated in detail. Time-frequency power and phase analyses can provide more detailed measures of brain dynamics of MMN deficits in schizophrenia. Method: 21 patients with schizophrenia and 21 healthy controls were tested with a roving frequency paradigm to generate MMN. Time-frequency domain power and phase-locking (PL) analysis was performed on all trials using short-time Fourier transforms with Hanning window tapering. A comprehensive battery (CANTAB) was used to assess neurocognitive functioning. Results: Mean MMN amplitude was significantly lower in patients with schizophrenia (95% CI 0.18 - 0.77). Patients showed significantly lower EEG power (95% CI -1.02 - -0.014) in the ~4-7 Hz frequency range (theta band) between 170 and 210 ms. Patients with schizophrenia showed cognitive impairment in multiple domains of CANTAB. However, MMN impairments in amplitude and power were not correlated with clinical measures, medication dose, social functioning or neurocognitive performance. Conclusion: The findings from this study suggested that while MMN may be a useful marker to probe NMDA receptor mediated mechanisms and associated impairments in gain control and perceptual changes, it may not be a useful marker in association with clinical or cognitive changes. Trial-by-trial EEG power analysis can be used as a measure of brain dynamics underlying MMN deficits which also can have implications for the use of MMN as a biomarker for drug discovery.