Biosocial models are preeminent in the study of schizophrenia, yet there has been little empirical testing of these models. Objective This study provided the first test of a biosocial causal model of functional outcome in schizophrenia, using neurocognition, social cognition, social competence and social support as predictors of both global and specific domains of functional outcome. Method The design used baseline variables to predict both concurrent functional status and prospective 12-month functional outcome. Subjects were recruited upon admission to outpatient community-based psychosocial rehabilitation programs shown in previous studies to be effective in improving functional outcomes. 139 individuals diagnosed with schizophrenia or schizoaffective disorder participated in the study; 100 participants completed the 12-month assessments. Face-to-face interviews assessed neurocognitive functioning (with five neuropsychological measures), social cognition (as perception of emotion), social competence, social support, and functional outcome which consisted of items covering the domains of social, independent living, and work functioning. Results Path analysis modeling showed that the proposed biosocial models had strong fit with the data, for both concurrent and 12-month global functional outcomes, with fit indices ranging from .95 to .98. The model explained 21% of the variance in concurrent global functional outcome, and 14% of the variance in 12-month prospective outcome. Conclusions The support for this model was strong, and it has implications for understanding the causal factors related to functional outcome, as well as for intervention strategies for improving functional outcomes in schizophrenia.