Functional deficits including cognitive impairment and social dysfunction are the core symptoms of schizophrenia (SCZ), and sensory gating (SG) deficits may be involved in the pathological mechanism of functional deficits in SCZ. This study was to investigate the relationship between defective P50 inhibition and functional deficits in first-episode drug na & iuml;ve (FEDN) SCZ patients. A total of 95 FEDN SCZ patients and 53 healthy controls (HC) were recruited. The Chinese version of UCSD Performance-Based Skills (UPSA), MATRICS Consensus Cognitive Battery (MCCB), and EEG system were used to assess the social function, cognitive performance, and P50 inhibition, respectively. The MCCB total score and eight domain scores were significantly lower in patients with FEDN SCZ than those in HC (all p < 0.05). The UPSA total score and financial skills scores were also significantly lower in SCZ patients than that in the HC (all p < 0.05). Compared with HC, patients with FEDF SCZ had a higher P50 ratio (all p < 0.05). There was no correlation between P50 components and MCCB scores in patients with FEDF SCZ. However, there was only a correlation between the P50 ratio and UPSA financial skills, communication skills, or total score in patients (all p < 0.05). Defective P50 inhibition in FEDN SCZ patients may be associated with social dysfunction but not cognitive impairment, suggesting that the social dysfunction and cognitive impairment of patients with FEDN SCZ may have different pathogenic mechanisms.