Episodic memory (EM) impairments in schizophrenia (SZ) are predictive of functional outcome and are a potential endophenotype of the disorder. The current study investigated the neuroanatomical correlates of EM encoding and retrieval in SZ with structural magnetic resonance and diffusion tensor imaging (DTI) measures in 22 patients with SZ and 22 age- and gender-matched healthy controls. Tract-based Spatial Statistics (TBSS) was used to investigate microstructural alterations in white matter (WM), while FreeSurfer surface-based analysis was used to determine abnormalities in grey matter (GM) and WM volumetrics and cortical thickness. Compared to controls, patients demonstrated GM deficits in temporal and parietal regions and lower fractional anisotropy (FA) of WM in diffuse brain regions. Patients also demonstrated reduced functioning in both encoding and retention of auditory-verbal EM. Among patients but not controls, EM encoding correlated with WM volume in the orbitofrontal cortex and increased radial diffusivity in the fornix, whereas EM retrieval correlated with WM volume in posterior parietal cortex. These findings suggest a differential role for frontal and parietal WM in EM encoding and retrieval processes, while myelin integrity of the fornix may play a specific role in mediating EM encoding processes in SZ.