OBJECTIVE: It has been well established that schizophrenic patients have neurocognitive deficits, but it is not known how these deficits influence the daily lives of patients. The goal of this review was to determine which, if any, neurocognitive deficits restrict the functioning of schizophrenic patients in the outside world. METHOD: The author reviewed studies that have evaluated neurocognitive measures as predictors and correlates of functional outcome for schizophrenic patients. The review included 1) studies that have prospectively evaluated specific aspects of neurocognition and community (e.g., social and vocational) functioning (six studies), 2) all known studies of neurocognitive correlates of social problem solving (five studies), and 3) all known studies of neurocognitive correlates and predictors of psychosocial skill acquisition (six studies). RESULTS: Despite wide variation among studies in the selection of neurocognitive measures, some consistencies emerged. The most consistent finding was that verbal memory was associated with all types of functional outcome. Vigilance was related to social problem solving and skill acquisition. Card sorting predicted community functioning but not social problem solving. Negative symptoms were associated with social problem solving but not skill acquisition. Notably, psychotic symptoms were not significantly associated with outcome measures in any of the studies reviewed. CONCLUSIONS: Verbal memory and vigilance appear to be necessary for adequate functional outcome. Deficiencies in these areas may prevent patients from attaining optimal adaptation and hence act as "neurocognitive rate-limiting factors." On the basis of this review of the literature, a series of hypotheses are offered for follow-up studies.