Objective A positive relationship between cholesterol levels and cognition has been reported in various human and animal studies, but has never been investigated in schizophrenia. The goal of this study was to examine this relationship in schizophrenic patients randomized to clozapine, olanzapine or haloperidol. Method This was a double-blind randomized prospective 12-week study. Participants received a baseline evaluation including a cognitive battery consisting of an evaluation of psychomotor function, general executive function, visual and verbal memory, and visuospatial ability. Their fasting serum cholesterol level was also assessed. The participants were then randomized to clozapine, olanzapine, or haloperidol. They were evaluated at the end of 12weeks. A general cognitive index (GCI) derived from the cognitive battery was the primary variable. Results 82 patients had both baseline and endpoint neurocognitive assessments and cholesterol levels. There was a statistically and clinically significant positive association between change in cholesterol levels and change in GCI. This association was especially pronounced for verbal memory. There was no interaction between medication grouping and cholesterol level; the positive association was observable separately in each medication group. It was very robust and remained significant after we controlled for glucose and triglyceride levels, anticholinergic side effects, medication serum levels, cholesterol lowering medications, and pre-study antipsychotic medications. Conclusions Cholesterol levels show a strong association with cognition in schizophrenia in all medication groups. Further research on the role of lipid metabolism in cognition may suggest new treatments for this core deficit of schizophrenia.