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OBJECTIVE: Cognitive adaptation training is a novel psychosocial treatment approach designed to improve adaptive functioning by using compensatory strategies in the home or work environment to bypass the cognitive deficits associated with schizophrenia. The authors tested the effect of cognitive adaptation training on level of adaptive functioning in outpatients with schizophrenia. METHOD: Forty-five patients with DSM-IV schizophrenia or schizoaffective disorder were randomly assigned for 9 months to one of three treatment conditions: 1) standard medication follow-up, 2) standard medication follow-up plus cognitive adaptation training, and 3) standard medication follow-up plus a condition designed to control for therapist time and provide environmental changes unrelated to cognitive deficits. Comprehensive assessments were conducted every 3 months by raters who were blind to treatment condition. RESULTS: Significant differences were found between the three treatment groups in levels of psychotic symptoms, motivation, and global functioning at the end of the 9-month study period. Patients in the cognitive adaptation training group overall had higher levels of improvement, compared with those in the remaining treatment conditions. In addition, the three groups had significantly different relapse rates over the 9-month study: 13% for the cognitive adaptation training group, 69% for the group in which therapist time and environmental changes were controlled, and 33% for the group who received standard follow-up only. CONCLUSIONS: Compensatory strategies may improve outcomes for patients with schizophrenia.