Schizophrenia (SZ) is a severe mental disorder characterised by disruptions in cognition, behaviour, and perception, significantly impacting an individual's life. Traditional SZ diagnosis methods are labour-intensive and prone to errors. This study presents an innovative automated approach for detecting SZ acquired through electroencephalogram (EEG) sensor signals, aiming to improve diagnostic efficiency and accuracy. We utilised Fast Independent Component Analysis to remove artefacts from raw EEG sensor data. A novel Automated Log Energy-based Empirical Wavelet Reconstruction (ALEEWR) technique was introduced to reconstruct decomposed modes based on their variability, ensuring effective extraction of meaningful EEG signatures. Cepstral-based features-cepstral activity, cepstral mobility, and cepstral complexity-were used to capture the power, rate of change, and irregularity of the cepstrum of preprocessed EEG signals. ANOVA-based feature selection was applied to refine these features before classification using the K-Nearest Neighbour (KNN) algorithm. Our approach achieved an exceptional accuracy of 99.4%, significantly surpassing previous methods. The proposed ALEEWR and cepstral analysis demonstrated high precision, sensitivity, and specificity in the automated diagnosis of schizophrenia. This study introduces a highly accurate and efficient method for SZ detection using EEG technology. The proposed techniques offer significant improvements in diagnostic accuracy, with potential implications for enhancing SZ diagnosis and patient care through automated systems.