Context processing abnormalities may explain thought disorder in schizophrenia/schizotypy. This study aimed to assess predictive and integrative context processing in subjects with high or low scores on the Schizotypal Personality Questionnaire (SPQ). The N400 amplitude was recorded during semantic judgment of sentence pairs ending with a lateralized expected or unexpected word from the same or a different category (related and unrelated violation). In both groups, the N400 amplitude was less negative for expected words versus unrelated violations, regardless of which hemisphere received the stimulus, and for related versus unrelated violations, but only for left‐hemisphere stimuli. The N400 amplitude for unrelated violations was less negative in subjects with high SPQ scores for both hemispheres. These results indicate that subjects with schizotypal traits use context to predict or integrate congruent words, but fail to inhibit incongruent words.