Background Memory profiles corresponding to nearly normal (NN), Subcortical impairment (Sub) and Cortical impairment (Cort) have been identified in schizophrenia by several investigators using cluster analytic techniques. Specific aims of the current study were to (1) perform a K means cluster analysis using Hopkins Verbal Learning Test-R scores (2) create classification rules based upon cluster distributions and expected memory profiles and to determine their concordance with cluster analysis; (3) explore differences among classified groups on demographic, neurocognitive and social cognitive domains; and (4) determine the stability of the classifications 12months later. Methods Clinical and neuropsychological assessments were obtained at intake and 12months from 151 outpatients with schizophrenia or schizoaffective disorder from an urban community mental health center. Results Clusters corresponded to those of the three expected subgroups. Using simple decision rules, rationally-derived groups were created and had 90% classification agreement with cluster groups. Groups did not differ on illness characteristics. Groups differed significantly in neurocognitive and social cognitive domains with NN>Cort and NN>Sub in all domains except visual/motor speed. Sub>Cort in verbal working memory. NN>Cort in social cognition. Rationally derived groupings showed fair stability at 12month follow-up with 65% classification agreement. Specificity was good for NN (82.4%). Discussion Results support validity of memory profiles and offer some support for their stability at 12months. The simple rules for classification can be used by other investigators for neuroimaging and other studies. Findings support the hypothesis that verbal memory may be an important source of heterogeneity in schizophrenia.