OBJECTIVES: Neurocognitive deficits were shown to be associated with poorer functional outcomes. This study examines if changes in cognitive deficits are linked to changes in functional outcomes in the long-term treatment of schizophrenia patients in usual care, and whether this link is independent of changes in EPS, Positive and Negative symptoms. METHOD: Participants were 2144 patients who completed at least 1-year follow up in the U.S. Schizophrenia Care and Assessment Program, a 3-year observational study of patients with schizophrenia. Cognitive impairment was assessed by the PANSS Cognitive Factor (PANSS Cog). Functional outcomes were measured by the Quality of Life Scale (QLS), the Global Assessment of Functioning Scale (GAF), and the SCAP-Health Questionnaire (SCAP-HQ). Changes were measured from baseline to the end of 1-year follow-up. Statistical analysis employed Pearson correlations, path analyses, and generalized linear models. RESULTS: Improvements in the PANSS Cog were significantly correlated with improvements in occupational role functioning, social functioning, capacity to engage in activities, participation in the community, GAF, daily activities, employment status, and hourly wages. When adjusting for EPS, Positive and Negative symptoms, cognitive improvements were significantly (p <0.05) associated with improved GAF, QLS total score, occupational role functioning, and hourly wages. CONCLUSION: Improvements in cognitive deficits appear to be associated with improved functional outcomes. Since the PANSS Cognitive Factor was used as a proxy measure of cognition, current findings will require replications with neuropsychological tests. Findings suggest that improving cognitive functioning may become one of the most important clinical targets in the treatment of schizophrenia.