BACKGROUND: There is growing evidence to suggest that delusions associated with schizophrenia arise from altered structural brain connectivity. The present study investigated whether structural changes in three major fasciculi that interconnect the limbic system - the cingulum bundle, uncinate fasciculus and fornix - are associated with delusions in chronic schizophrenia patients. METHODS: Free-water corrected Diffusion Tensor Imaging was used to investigate the association between delusions and both microstructural changes within these three fasciculi and extracellular changes in the surrounding free-water. Clinical data and diffusion MRI scans were obtained from 28 healthy controls and 86 schizophrenia patients, of whom 34 had present state delusions, 35 had a lifetime history but currently remitted delusions, and 17 had never experienced delusions. RESULTS: While present state and remitted delusions were found to be associated with reduced free-water corrected fractional anisotropy (FAT) and increased free-water corrected radial diffusivity (RDT) in the cingulum bundle bilaterally, extracellular free-water (FW) in the left cingulum bundle was found to be specifically associated with present state delusions in chronic schizophrenia. No changes were observed in the remaining tracts. CONCLUSIONS: These findings suggest that state and trait delusions in chronic schizophrenia are associated with microstructural processes, such as myelin abnormalities (as indicated by decreased FAT and increased RDT) in the cingulum bundle and that state delusions are additionally associated with extracellular processes such as neuroinflammation or atrophy (as indicated by increased FW) in the left cingulum bundle.