Social skills training (SST) has been widely used in attempts to rehabilitate chronic schizophrenic patients. The key assumption underlying SST is that social skills deficits are important determinants of the social isolation, poor social role functioning, and low quality of life characteristic of schizophrenic patients. To test this assumption, 89 patients meeting DSM-III-R criteria for schizophrenia were assessed on behavioural and self-report measures of social skills. A structured clinical interview, a self-report inventory of distress during social interaction, and self-monitoring of time in social interaction were used to assess social functioning. Positive psychotic symptoms were assessed in a standardised clinical interview. A structural equation modelling analysis showed that observed social skills predicted social functioning, and that this association was statistically independent of severity of psychotic symptoms. This finding is consistent with the hypothesis that social skills are important in the social functioning of patients with schizophrenia.