Goal-directed human behavior is enabled by hierarchically-organized neural systems that process executive commands associated with higher brain areas in response to sensory and motor signals from lower brain areas. Psychiatric diseases and psychotic conditions are postulated to involve disturbances in these hierarchical network interactions, but the mechanism for how aberrant disease signals are generated in networks, and a systems-level framework linking disease signals to specific psychiatric symptoms remains undetermined. In this study, we show that neural networks containing schizophrenia-like deficits can spontaneously generate uncompensated error signals with properties that explain psychiatric disease symptoms, including fictive perception, altered sense of self, and unpredictable behavior. To distinguish dysfunction at the behavioral versus network level, we monitored the interactive behavior of a humanoid robot driven by the network. Mild perturbations in network connectivity resulted in the spontaneous appearance of uncompensated prediction errors and altered interactions within the network without external changes in behavior, correlating to the fictive sensations and agency experienced by episodic disease patients. In contrast, more severe deficits resulted in unstable network dynamics resulting in overt changes in behavior similar to those observed in chronic disease patients. These findings demonstrate that prediction error disequilibrium may represent an intrinsic property of schizophrenic brain networks reporting the severity and variability of disease symptoms. Moreover, these results support a systems-level model for psychiatric disease that features the spontaneous generation of maladaptive signals in hierarchical neural networks.