Background: Habituation is considered to have protective and filtering mechanisms. The present study is aim to find the casual relationship and mechanisms of excitatory–inhibitory (E/I) dysfunctions in schizophrenia (SCZ) via habituation.Methods: A dichotic listening paradigm was performed with simultaneous EEG recording on 22 schizophrenia patients and 22 gender- and age-matched healthy controls. Source reconstruction and dynamic causal modeling (DCM) analysis were performed to estimate the effective connectivity and casual relationship between frontal and temporal regions before and after habituation.Results: The schizophrenia patients expressed later habituation onset (p < 0.01) and hyper-activity in both lateral frontal–temporal cortices than controls (p = 0.001). The patients also showed decreased top-down and bottom-up connectivity in bilateral frontal–temporal regions (p < 0.01). The contralateral frontal–frontal and temporal–temporal connectivity showed a left to right decreasing (p < 0.01) and right to left strengthening (p < 0.01).Conclusions: The results give causal evidence for E/I imbalance in schizophrenia during dichotic auditory processing. The altered effective connectivity in frontal–temporal circuit could represent the trait bio-marker of schizophrenia with auditory hallucinations.