BACKGROUND: Auditory verbal hallucinations (AVH) are the most prevalent symptom in schizophrenia. They are associated with increased activation within the temporoparietal cortices and are refractory to pharmacological and psychological treatment in approximately 25% of patients. Low frequency repetitive transcranial magnetic stimulation (rTMS) over the temporoparietal cortex has been demonstrated to be effective in reducing AVH in some patients, although results have varied. The cortical mechanism by which rTMS exerts its effects remain unknown, although data from the motor system is suggestive of a local cortical inhibitory effect. We explored neuroimaging differences in healthy volunteers between application of a clinically utilized rTMS protocol and a sham rTMS equivalent when undertaking a prosodic auditory task. METHOD: Single-blind placebo controlled fMRI study of 24 healthy volunteers undertaking an auditory temporoparietal activation task, who received either right temporoparietal rTMS or sham RTMS. RESULTS: The main effect of group was bilateral inferior parietal deactivation following real rTMS. An interaction of group and task type showed deactivation during real rTMS in the right superior temporal gyrus (STG), left thalamus, left postcentral gyrus and cerebellum. However, the left parietal lobe showed an increase in activation following right sided real rTMS, but this increase was specific to a non-linguistic, tone-sequence task. CONCLUSION: rTMS does cause local inhibitory effects, not only in the underlying region of application, but also in functionally connected cortical regions. However, there is also a related, task dependent, increase in activation within selected cortical areas in the contralateral hemisphere; these are likely to reflect compensatory mechanisms, and such cortical activation may in some cases contribute to, or retard, some of the therapeutic effects seen with rTMS.