Deficits in glutamatergic function are well established in schizophrenia (SZ) as reflected in “input” dysfunction across sensory systems. By contrast, less is known about contributions of the GABAergic system to impairments in excitatory/inhibitory balance. We investigated this issue by measuring contrast thresholds for orientation detection, orientation discriminability, and orientation-tilt-aftereffect curves in schizophrenia subjects and matched controls. These measures depend on the amplitude and width of underlying orientation tuning curves, which, in turn, depend on excitatory and inhibitory interactions. By simulating a well-established V1 orientation selectivity model and its link to perception, we demonstrate that reduced cortical excitation and inhibition are both necessary to explain our psychophysical data. Reductions in GABAergic feedback may represent a compensatory response to impaired glutamatergic input in SZ, or a separate pathophysiological event. We also found evidence for the widely accepted, but rarely tested, inverse relationship between orientation discriminability and tuning width.