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Background: We previously reported that higher levels of peripheral oxytocin are associated with lower levels of positive, general, and overall symptoms in women but not in men with schizophrenia. Here we investigate the influence of sex, sex steroid hormone fluctuations, and peripheral oxytocin levels on emotional processing in men and women with schizophrenia. Method: Twenty-two women with schizophrenia and 31 female controls completed the Penn Emotion Acuity Test (PEAT), a facial emotion recognition and perception task, during two menstrual cycle phases: 1) early follicular (Days 2-4; low estrogen/progesterone) and 2) midluteal (Days 20-22; high estrogen/progesterone). Twenty-six males with schizophrenia and 26 male controls completed testing at comparable intervals. We obtained plasma hormone assays of estrogen, progesterone, testosterone, and oxytocin. Results: No sex differences were noted on the PEAT. Plasma oxytocin levels did not fluctuate across phases of the menstrual cycle. However, female patients and controls more accurately identified facial emotions during the early follicular versus midluteal phase (p<0.05). Higher oxytocin levels related to perceiving faces as happier in both female patients (r= -0.46, p=0.04) and controls (r= -0.40, p = 0.04) but not in men. Conclusion: Like healthy women, women with schizophrenia demonstrate menstrual-cycle dependent fluctuations in recognizing emotional cues. Like healthy women, female patients with higher levels of oxytocin perceived faces as happier. Future studies need to address whether this sex-specific relationship is associated with trust and other positive emotions, and whether exogenous oxytocin might enhance mood states and social interaction in female or all schizophrenia patients. (C) 2011 Elsevier B.V. All rights reserved