Cognitive impairments in schizophrenia are well documented and correlated with functional disability. Although some patients demonstrate normal neuropsychological (NP) functioning, little is known about their functional disability. We examined the cross-sectional functional implications of NP normality and symptomatic remission in older outpatients diagnosed with schizophrenia or schizoaffective disorder, who were administered a NP battery and performance-based measures of functional and social competence, with their real-world functioning rated by case managers. NP status was classified by the General Deficit Score (GDS) and remission status was based on the Positive and Negative Syndrome Scale (PANSS), yielding four subsamples of patients: NP normal-remitted (n = 21), NP normal-symptomatic (n = 22), NP impaired-remitted (n = 90), and NP impaired-symptomatic (n = 97). NP normal patients demonstrated better functional and social competence and better ratings of real world functioning, after controlling for premorbid abilities. However, compared to normative date, NP normal patients manifested disability in several real-world domains, including residential status. These results suggest that NP status is a better predictor of functional outcome then symptom status or the interaction of the two factors. The disability seen in NP normal cases indicates that factors other than cognitive impairments may determine aspects of everyday outcomes in schizophrenia. (JINS, 2008, 14, 479–488.)