The current study investigated the neurophysiological underpinnings of emotional maintenance in schizophrenia (SCZ) and whether aberrant neural responses predicted deficits in affective decision making and real-world motivated behavior. Event-related potentials (ERPs) were recorded from 27 SCZ outpatients and 23 healthy controls (CN) during an emotional maintenance task in which participants were presented an initial image for 3 seconds and then required to maintain a mental representation of the intensity that image over a delay period of varying lengths and determine whether the initial image was more or less intense than the second image. The Late Positive Potential (LPP) was used as a neurophysiological marker of emotional maintenance during the delay period. SCZ showed normal in-the-moment emotion experience to positive stimuli; however, SCZ rated negative and neutral pictures as more intense than CN. SCZ also displayed deficits in emotional maintenance accuracy. Furthermore, ERP data indicated reduced LPP amplitude during picture viewing for SCZ compared to CN, and only CN showed persistence of the LPP for positive stimuli into the offset delay period for approximately 1 second and this was significantly associated with behavioral emotional maintenance performance. Behavioral emotional maintenance performance also significantly predicted clinically rated negative symptoms (motivation and pleasure) and poor functional outcome. Thus, impairments in emotional maintenance may offer a promising new theory as to why people with SCZ fail to pursue goal-directed activities.