Background Schizophrenia is characterized by impairment in multiple aspects of community functioning. Available literature suggests that community functioning may be enhanced through cognitive remediation, however, evidence is limited regarding whether specific neurocognitive domains may be treatment targets. We characterized schizophrenia subjects based on their level of community functioning through cluster analysis in an effort to identify whether specific neurocognitive domains were associated with variation in functioning. Methods Schizophrenia (SCZ, n=60) and control (CON, n=45) subjects completed a functional capacity task, social competence role-play, functional attainment interview, and a neuropsychological battery. Multiple cluster analytic techniques were used on the measures of functioning in the schizophrenia subjects to generate functionally-defined subgroups. MANOVA evaluated between-group differences in neurocognition. Results The cluster analysis revealed two distinct groups, consisting of 36 SCZ characterized by high levels of community functioning (HF-SCZ) and 24 SCZ with low levels of community functioning (LF-SCZ). There was a main group effect for neurocognitive performance (p <0.001) with CON outperforming both SCZ groups in all neurocognitive domains. Post-hoc tests revealed that HF-SCZ had higher verbal working memory compared to LF-SCZ (p ≤0.05, Cohen's d =0.78) but the two groups did not differ in remaining domains. Conclusion The cluster analysis classified schizophrenia subjects in HF-SCZ and LF-SCZ using a multidimensional assessment of community functioning. Moreover, HF-SCZ demonstrated rather preserved verbal working memory relative to LF-SCZ. The results suggest that verbal working memory may play a critical role in community functioning, and is a potential cognitive treatment target for schizophrenia subjects.