While it is known that children of schizophrenia parents perform more poorly on tests of cognitive functioning than children of normal parents, less certain is the degree to which such deficits predict schizophrenia outcome, whether cognitive functioning deteriorates during childhood in preschizophrenia individuals, and whether nongenetic etiologic factors (such as obstetric complications) contribute to these deficits. In the present study, 72 patients with schizophrenia or schizoaffective disorder, 63 of their siblings not diagnosed with schizophrenia, and 7,941 controls with no diagnosis were ascertained from a birth cohort whose members had been evaluated with standardized tests of cognitive functioning at 4 and 7 years of age. Adult psychiatric morbidity was ascertained via a longitudinal treatment data base indexing regional public health service utilization, and diagnoses were made by review of all pertinent medical records according to DSM-IV criteria. Both the patients with schizophrenia and their unaffected siblings performed significantly worse than the nonpsychiatric controls (but did not differ from each other) on verbal and nonverbal cognitive tests at 4 and 7 years of age. Preschizophrenia cases and their siblings were increasingly overrepresented across decreasing quartiles of the performance distributions. There was not significant intra-individual decline, and there were no significant relationships between obstetric complications and test performance among the preschizophrenia subjects. These results suggest that during the period from age 4 to age 7 years, premorbid cognitive dysfunction in schizophrenia represents a relatively stable indicator of vulnerability deriving from primarily genetic (and/or shared environmental) etiologic influences.