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OBJECTIVE: The potential of social cognition as a mediator of relations between neurocognition and functional status in schizophrenia has been suggested by correlational studies that link neurocognition to social cognition or link social cognition to functional status. The authors used structural equation modeling to test more directly whether one aspect of social cognition (social perception) mediates relations between basic visual perception and functional status in patients with schizophrenia. METHOD: Seventy-five outpatients with schizophrenia were administered measures of early visual processing (computerized visual masking procedures), social perception (Half Profile of Nonverbal Sensitivity), and functional status (Role Functioning Scale). RESULTS: Structural equation modeling supported social perception as a mediator of relations between early visual processing and functional status in schizophrenia. The mediation model indicated that early visual processing is linked to functional status through social perception, thereby supporting a significant indirect relationship. The direct relationship between early visual processing and functional status was significant in a model that did not include social perception but was not significant in the mediation model that included social perception. CONCLUSIONS: Social cognition appears to be a key determinant of functional status in schizophrenia. Using a very basic measure of visual perception, the present study found that social perception mediates the influence of early visual processing on functional status in schizophrenia.