To examine cognitive impairment in schizophrenia and its impact on social functioning.Cohort studies recording cognitive and social development, studies of predictors of poor community outcome, and evidence from brain imaging studies are reviewed.Executive function deficits, and poor performance in verbal memory, vigilance, and working memory tests are strong predictors of poor community outcome and impairment in skills learning. PET scans of regional cerebral blood flow suggest a dynamic imbalance between different cerebral areas rather than overall loss of brain function.Chronic cognitive impairment is the strongest predictor of social disability. Results suggest that the impairment of brain function associated with executive deficits is not necessarily irreversible and may therefore be treatable with appropriate drug therapy.