Due to its three-dimensional folding pattern, the human neocortex poses a challenge for accurate co-registration of grouped functional brain imaging data. The present study addressed this problem by employing three-dimensional continuum-mechanical image-warping techniques to derive average anatomical representations for co-registration of functional magnetic resonance brain imaging data obtained from 10 male first-episode schizophrenia patients and 10 age-matched male healthy volunteers while they performed a version of the Tower of London task. This novel technique produced an equivalent representation of blood oxygenation level dependent (BOLD) response across hemispheres, cortical regions, and groups, respectively, when compared to intensity average co-registration, using a deformable Brodmann area atlas as anatomical reference. Somewhat closer association of Brodmann area boundaries with primary visual and auditory areas was evident using the gyral pattern average model. Statistically-thresholded BOLD cluster data confirmed predominantly bilateral prefrontal and parietal, right frontal and dorsolateral prefrontal, and left occipital activation in healthy subjects, while patients' hemispheric dominance pattern was diminished or reversed, particularly decreasing cortical BOLD response with increasing task difficulty in the right superior temporal gyros. Reduced regional gray matter thickness correlated with reduced left-hemispheric prefrontal/frontal and bilateral parietal BOLD activation in patients. This is the first study demonstrating that reduction of regional gray matter in first-episode schizophrenia patients is associated with impaired brain function when performing the Tower of London task, and supports previous findings of impaired executive attention and working memory in schizophrenia.