Deficits in a wide array of functional outcome areas (eg, social functioning, social skills, independent living skills, etc) are marked in schizophrenia. Consequently, much recent research has attempted to identify factors that may contribute to functional outcome; social cognition is one such domain. The purpose of this article is to review research examining the relationship between social cognition and functional outcome. Comprehensive searches of PsycINFO and MEDLINE/PUBMED were conducted to identify relevant published manuscripts to include in the current review. It is concluded that the relationship between social cognition and functional outcome depends on the specific domains of each construct examined; however, it can generally be concluded that there are clear and consistent relationships between aspects of functional outcome and social cognition. These findings are discussed in light of treatment implications for schizophrenia.