Schizophrenia and aging are both risk factors for deficits in independent functioning, yet relatively few studies have examined the level and predictors of functional status of older outpatients with schizophrenia. We compared employment history, current living situation, and driving status of 83 middle-aged and elderly outpatients with schizophrenia (mean age 59 years), and 46 demographically equivalent normal comparison subjects. We also examined the relationships of neuropsychological functioning and psychiatric symptoms to these aspects of everyday functioning. The schizophrenia patient group had consistently worse functional status than the normal comparison group, but 30% of the patients were employed at least 50% of the time during their post-schizophrenia-onset adult lives, 73% were living in a house or apartment and responsible for meeting most of their own daily needs, and 43% were current drivers. Severity of negative symptoms (but not that of positive symptoms) was inversely correlated with functional status. Worse performance on a neuropsychological battery was generally associated with worse functional status. These findings counter notions that functional impairment is inevitable in older schizophrenia patients, and highlight the importance of assessment of functional skills and possibly targeting them as a treatment focus.