In a previous study we have demonstrated, using a novel diffusion MRI analysis called free-water imaging, that the early stages of schizophrenia are more likely associated with a neuroinflammatory response and less so with a white matter deterioration or a demyelination process. What is not known is how neuroinflammation and white matter deterioration change along the progression of the disorder. In this study we apply the free-water measures on a population of 29 chronic schizophrenia subjects and compare them with 25 matching controls. Our aim was to compare the extent of free-water imaging abnormalities in chronic subjects with the ones previously obtained for subjects at their first psychotic episode. We find that chronic subjects showed a limited extent of abnormal increase in the volume of the extracellular space, suggesting a less extensive neuroinflammatory response relative to patients at the onset of schizophrenia. At the same time, the chronic schizophrenia subjects had greater extent of reduced fractional anisotropy compared to the previous study, suggesting increased white matter deterioration along the progression of the disease. Our findings substantiate the role of neuroinflammation in the earlier stages of the disorder, and the effect of neurodegeneration that is worsening in the chronic phase.