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Patients with schizophrenia show strong impairments in visual backward masking, which are associated with reduced EEG N1 responses. However, it is currently unclear whether reduced N1 amplitudes in patients reflect attenuated neural responses or increased inter-trial latency variability, as both can lead to reduced trial-averaged responses. Previous studies using trial-averaged data cannot distinguish between these two possibilities. Here, we estimated inter-trial latency variability of the visual N1 component and found significantly increased variability in patients compared to controls. Inter-trial latency-variability was a strong predictor of the N1 amplitude in both groups. Importantly, after accounting for the effect of latency variability in the group comparison, patients continued to exhibit significantly reduced N1 amplitudes, although the effect size diminished from large to medium. These findings indicate that both higher latency variability and attenuated neural responses contribute to visual processing deficits in schizophrenia.