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OBJECTIVE: Although skills training is a validated psychosocial treatment for schizophrenia, generalization of the skills to everyday life has not been optimal. This study evaluated a behaviorally oriented method of augmenting clinic-based skills training in the community with the aim of improving opportunities, encouragement, and reinforcement for outpatients to use their skills in their natural environment. METHOD: Sixty-three individuals with schizophrenia were randomly assigned to 60 weeks of clinic-based skills training alone or of clinic-based skills training supplemented with manual-based generalization sessions in the community. Patients were also randomly assigned to receive either haloperidol or risperidone. Therapists’ fidelity to the manuals was measured. Patients’ acquisition of the skills from pre- to posttraining was evaluated. The primary outcome measures were the Social Adjustment Scale-II and the Quality of Life Scale. RESULTS: Seventy-one percent of the patients completed the trial. Only six participants experienced psychotic exacerbations during the trial. There was no evidence of a differential medication effect on social functioning. Social functioning improved modestly in both psychosocial conditions over time; participants who received augmented skills training in the community showed significantly greater and/or quicker improvements. CONCLUSIONS: Given judicious and effective antipsychotic medication that limited exacerbations to less than 10% during the trial, a wide range of outpatients with schizophrenia demonstrated substantial learning of illness management and social skills in the clinic. When clinic-based skills training was augmented by in vivo training and consultation, transfer of the skills to everyday life was enhanced. These benefits were established regardless of the medications prescribed.