This study compared the functional capacity and neurocognitive status of homeless and housed adults with schizophrenia or schizoaffective disorder and examined whether housing status is an independent predictor of functional capacity. We examined 30 homeless individuals and 21 housed controls and matched for diagnosis, sex, and age. The participants, recruited from an acute psychiatric inpatient unit, completed a measure of psychiatric symptom severity, a neuropsychological test battery, and a measure of functional capacity, the University of California-San Diego performance-based skills assessment (UPSA). There were no significant differences in performance on the neuropsychological test battery or the UPSA between housed and homeless participants. In a multivariate model, however, cognitive status and housing status were independent predictors of functional capacity, and homelessness was associated with an approximately 9-point lower score on the UPSA. This finding highlights the importance of neuropsychological screening and interventions that promote housing stability for patients with schizophrenia.