N400 evoked response potentials (ERP) reliably map key semantic deficits in schizophrenia. Assessing them as endophenotypes might help in better understanding of schizophrenia risk and their use as biomarkers. We aimed to study N400 as an endophenotype marker by comparing schizophrenia (SCZ), unaffected first-degree relatives (FDR) and healthy controls (HC) and, by assessing its ability to discriminate these groups. Drug naïve or free SCZ probands (n=30), their unaffected FDRs (n=30) and HC (n=30), underwent a 40-channel ERP recording while performing a custom-made, Hindi- sentence context paradigm task, containing congruent and incongruent conditions. Fifteen centro-parietal (CP) leads, further classified into three regions—midline (CPM), right (CPR) and left (CPL) were selected as electrodes-of-interest for assessing N400. During the incongruent condition, compared to both FDRs and HC, SCZ showed significantly longer N400 latency, at CPM, CPR and CPL, and significantly lesser (more negative) amplitude, at CPM; no significant difference was noted between FDR and HC groups. On discriminant functional analysis, significant N400 predictors could accurately classify 73.3% SCZ from HC and 75% of SCZ from FDR. We conclude that N400 deficits, elicited by the incongruent condition of the sentence task, could be potential biomarkers to define disease state in schizophrenia; they may not be endophenotype markers.