This article has discussed the relationship between cognitive deficits and functional outcome in schizophrenia. This relationship was noted first by Kraepelin and Bleuler at the beginning of the twentieth century. With the introduction of conventional neuroleptics, the focus shifted toward the treatment of positive symptoms. In the past few decades, cognitive dysfunction has been recognized as a fundamental feature of schizophrenia and has been shown repeatedly to have a negative association with functional outcome [6]. Improvement in cognitive functioning became one of the most important clinical targets in the treatment of schizophrenia in the 1990s [82]. Main domains of cognition that are disrupted significantly in schizophrenia include attention, executive function, verbal and visuospatial working memory, and learning and memory. Although conventional antipsychotics are effective in treating positive symptoms, they lack the ability to improve cognitive impairment and produce poor functional outcome. Previous research has shown superior efficacy of atypical antipsychotics on cognitive impairments in schizophrenia compared with conventional antipsychotics. Because the heterogeneity of atypical antipsychotics in their pharmacologic properties, they have differential profiles of cognitive efficacy in patients with schizophrenia. Establishing the cognitive profile of each atypical antipsychotic is an important task. This knowledge can be used to address individual cognitive problems and needs. Because cognitive deficits have been shown to have associations with different aspects of clinical symptoms, limited learning in rehabilitation programs, and functional outcome in schizophrenia, targeting individual cognitive deficits would lead to greater treatment success in terms of clinical and functional outcome. Although atypical antipsychotics have some benefit on cognitive function, further efforts to improve cognitive function are required. Attempts at improving cognition in schizophrenia with specific cognitive enhancers pharmacologically and psychological therapies such as cognitive remediation might lead to better functional outcome in patients with schizophrenia.