Congenital prosopagnosia is lifelong face-recognition impairment in the absence of evidence for structural brain damage. To study the neural correlates of congenital prosopagnosia, we measured the face-sensitive N170 component of the event-related potential in three members of the same family (father (56 y), son (25 y) and daughter (22 y)) and in age-matched neurotypical participants (young controls: n = 14; 24.5 y±2.1; old controls: n = 6; 57.3 y±5.4). To compare the face sensitivity of N170 in congenital prosopagnosic and neurotypical participants we measured the event-related potentials for faces and phase-scrambled random noise stimuli. In neurotypicals we found significantly larger N170 amplitude for faces compared to noise stimuli, reflecting normal early face processing. The congenital prosopagnosic participants, by contrast, showed reduced face sensitivity of the N170, and this was due to a larger than normal noise-elicited N170, rather than to a smaller face-elicited N170. Interestingly, single-trial analysis revealed that the lack of face sensitivity in congenital prosopagnosia is related to a larger oscillatory power and phase-locking in the theta frequency-band (4–7 Hz, 130–190 ms) as well as to a lower intertrial jitter of the response latency for the noise stimuli. Altogether, these results suggest that congenital prosopagnosia is due to the deficit of early, structural encoding steps of face perception in filtering between face and non-face stimuli.