Background Individuals with schizotypal personality disorder (SPD) exhibit impaired cognitive functioning in a pattern similar to that found in schizophrenia; less clear is the extent to which these individuals also share schizophrenia patients' impairments in functional capacity and real-world functioning. Method We evaluated 46 SPD patients, as well as 38 individuals with avoidant personality disorder (AvPD) and 55 healthy controls (HC) on: cognitive functioning, real-world functioning (employment and residential status), and functional capacity (indexed by the UPSA, a performance-based skills assessment). Results We found that individuals with SPD exhibited worse performance on both the cognitive battery and the UPSA than the other groups; they were also less likely to be employed and to be living independently. Additionally, cognitive and UPSA performance in the SPD group was intercorrelated to a degree comparable to what has been found in schizophrenia, and this relationship was not present in the AvPD group. Finally, real-world functioning was related to UPSA performance for both patient groups. Conclusions SPD patients exhibit impaired real-world functioning suggesting that these deficits extend across the schizophrenia spectrum. In addition, there is supportive evidence for the validity and importance of performance-based measures such as the UPSA to predict everyday outcomes across the schizophrenia spectrum.