To better characterize hippocampal pathophysiology in schizophrenia, we conducted a longitudinal study evaluating hippocampal functional connectivity during resting state, using seeds prescribed in its anterior and posterior regions. We enrolled 34 unmedicated patients with schizophrenia or schizoaffective disorder (SZ) and 34 matched healthy controls. SZ were scanned while off medication, then were treated with risperidone for 6 weeks and rescanned (n = 22). Group differences in connectivity, as well as changes in connectivity over time, were assessed on the group's participant level functional connectivity maps. We found significant dysconnectivity with anterior and posterior hippocampal seeds in unmedicated SZ. Baseline connectivity between the hippocampus and anterior cingulate cortex, caudate nucleus, auditory cortex and calcarine sulcus in SZ predicted subsequent response to antipsychotic medications. These same regions demonstrated changes over the 6-week treatment trial that were correlated with symptomatic improvement. Our findings implicate several neural networks relevant to clinical improvement with antipsychotic medications.