Language disturbance is one of the main diagnostic features in schizophrenia and abnormalities of brain language areas have been consistently found in schizophrenic patients. The main aim of this study was to describe the impairment of micro and macrolinguistic abilities in a group of twenty-nine schizophrenic patients during the phase of illness stability compared to forty-eight healthy participants matched for age, gender and educational level. Microlinguistic abilities refer to lexical and morpho-syntactic skills, whereas macrolinguistic abilities relate to pragmatic and discourse level processing. Secondary aims were to detect the effect of macrolinguistic on microlinguistic ability, and the neuropsychological impairment associated with the linguistic deficit. The linguistic assessment was performed on story-telling. Three narratives were elicited with the help of a single-picture stimulus and two cartoon stories with six pictures each. A modified version of the Mental Deterioration Battery was used to assess selective cognitive performances. A series of t-tests indicated that all the macrolinguistic variables were significantly impaired in schizophrenic patients in at least one of the three story-tellings. Furthermore, the limited impairment found in microlinguistic abilities was influenced by macrolinguistic performance. Multivariate stepwise regression analyses suggested that reduced attention performances and deficit in executive functions were predictors of linguistic impairment. Language production in schizophrenia is impaired mainly at the macrolinguistic level of processing. It is disordered and filled with irrelevant pieces of information and derailments. Such erratic discourse may be linked to the inability to use pragmatic rules and to cognitive deficits involving factors such as attention, action planning, ordering and sequencing.