ABSTRACT: Prior research suggests that event-related potentials (ERP) obtained during active and passive auditory paradigms, which have demonstrated abnormal neurocognitive function in schizophrenia, may provide helpful tools in predicting transition to psychosis. In addition to ERP measures, reduced modulations of EEG alpha, reflecting top-down control required to inhibit irrelevant information, have revealed attentional deficits in schizophrenia and its prodromal stage. Employing a three-stimulus novelty oddball task, nose-referenced 48-channel ERPs were recorded from 22 clinical high-risk (CHR) patients and 20 healthy controls detecting target tones (12% probability, 500Hz; button press) among nontargets (76%, 350Hz) and novel sounds (12%). After current source density (CSD) transformation of EEG epochs (-200 to 1000ms), event-related spectral perturbations were obtained for each site up to 30Hz and 800ms after stimulus onset, and simplified by unrestricted time-frequency (TF) principal components analysis (PCA). Alpha event-related desynchronization (ERD) as measured by TF factor 610-9 (spectral peak latency at 610ms and 9Hz; 31.9% variance) was prominent over right posterior regions for targets, and markedly reduced in CHR patients compared to controls, particularly in three patients who later developed psychosis. In contrast, low-frequency event-related synchronization (ERS) distinctly linked to novels (260-1; 16.0%; mid-frontal) and N1 sink across conditions (130-1; 3.4%; centro-temporoparietal) did not differ between groups. Analogous time-domain CSD-ERP measures (temporal PCA), consisting of N1 sink, novelty mismatch negativity (MMN), novelty vertex source, novelty P3, P3b, and frontal response negativity, were robust and closely comparable between groups. Novelty MMN at FCz was, however, absent in the three converters. In agreement with prior findings, alpha ERD and MMN may hold particular promise for predicting transition to psychosis among CHR patients.