Background This study aims to examine the effects of change in neurocognition on functional outcomes and to examine predictors of change in social functions following a 12-week course of cognitive remediation in patients with schizophrenia and schizoaffective disorder with severe cognitive impairments. Method Level of social functioning was assessed using a performance based measure of functional capacity (PSP) in patients prior to and after the completion of 12-week cognitive remediation treatment (CRT). Participants completed a neuropsychological battery (MCCB-MATRICS) and clinical measures at both time points. Results 63 subjects with a mean age of 41.4 (SD=12.2) and with 12.2years of education (SD=2.4) were enrolled. There were significant improvements in overall PSP score from baseline to endpoint (p=0.021) as well as in PSP domain A (socially useful activities) (p≤0.001), domain B (personal and social relationships) (p=0.009), and domain D (disturbing and aggressive behaviors) (p=0.003). There was a significant improvement in the composite MCCB score (p=0.020) and the Working Memory (p<0.046). Stepwise logistic regression yielded a significant association for baseline Visual Learning (Wald=6.537, p=0.011, OR=1.195), Speed of Processing (Wald=4.112, p=0.043, OR=0.850) and level of PANSS positive symptoms (Wald=4.087, p=0.043, OR=0.739) with PSP overall improvement. Conclusions Faster speed of processing, better visual and verbal learning and less prominent positive symptoms were associated with greater functional improvement after a systematic cognitive intervention within a rehabilitative setting.