Reduced auditory mismatch negativity (MMN) is robustly impaired in schizophrenia. However, mechanisms underlying dysfunctional MMN generation remain incompletely understood. This study aimed to examine the role of evoked spectral power and phase-coherence towards deviance detection and its impairments in schizophrenia. Magnetoencephalography data was collected in 16 male schizophrenia patients and 16 male control participants during an auditory MMN paradigm. Analyses of event-related fields (ERF), spectral power and inter-trial phase-coherence (ITPC) focused on Heschl's gyrus, superior temporal gyrus, inferior/medial frontal gyrus and thalamus. MMNm ERF amplitudes were reduced in patients in temporal, frontal and subcortical regions, accompanied by decreased theta-band responses, as well as by a diminished gamma-band response in auditory cortex. At theta/alpha frequencies, ITPC to deviant tones was reduced in patients in frontal cortex and thalamus. Patients were also characterized by aberrant responses to standard tones as indexed by reduced theta-/alpha-band power and ITPC in temporal and frontal regions. Moreover, stimulus-specific adaptation was decreased at theta/alpha frequencies in left temporal regions, which correlated with reduced MMNm spectral power and ERF amplitude. Finally, phase-reset of alpha-oscillations after deviant tones in left thalamus was impaired, which correlated with impaired MMNm generation in auditory cortex. Importantly, both non-rhythmic and rhythmic components of spectral activity contributed to the MMNm response. Our data indicate that deficits in theta-/alpha- and gamma-band activity in cortical and subcortical regions as well as impaired spectral responses to standard sounds could constitute potential mechanisms for dysfunctional MMN generation in schizophrenia, providing a novel perspective towards MMN deficits in the disorder.