Schizophrenia is a mental disorder characterized by hallucinations and delusions. Here Schizophrenia (SCZ) is a complex mental disorder that may result in some combination ofhallucinations, delusions and disorganized thinking. Here SCZ patients and healthy controls(CTLs) report their level of confidence on a forced-choice task that manipulated the strengthof sensory evidence and prior information. Neither group’s responses can be explained bysimple Bayesian inference. Rather, individual responses are best captured by a modelwith different degrees of circular inference. Circular inference refers to a corruption ofsensory data by prior information and vice versa, leading us to ‘see what we expect’(through descending loops), to ‘expect what we see’ (through ascending loops) or both.Ascending loops are stronger for SCZ than CTLs and correlate with the severity of positivesymptoms. Descending loops correlate with the severity of negative symptoms. Both loopscorrelate with disorganized symptoms. The findings suggest that circular inference mightmediate the clinical manifestations of SCZ.