Background Cognitive functions are important prognostic factors for schizophrenia (SZ), while ability to perform activities of daily living are important measures of functional capacity. The relationship between cognition and functional capacity has not been tested extensively in India. Objective To compare persons with SZ with controls on measures of cognition and functional capacity, and evaluate correlations between cognitive performance and functional capacity. Method Schizophrenia outpatients and controls without psychiatric illness (DSM IV) who completed the MATRICS Consensus Cognitive Battery and Functional Assessment Battery comprised of two tests from University of California San Diego (UCSD) Performance Based Skill Assessment (UPSA), one Test of Adaptive Behavior in Schizophrenia (TABS) and one test from University of California San Diego Performance Based Skill Assessment Brief edition (UPSA-B). Cognitive and functional domains were examined using regression analyses, with relevant covariates. Results Cases (N=51) though younger, were more educated than controls (N=41). Adjusting for education, controls performed better than cases in 3/7 cognitive and 4/5 domains of functional capacity but similarly in ‘household management’. Among both cases and controls, cognitive measures of verbal learning and speed of processing overlapped with functional capacity (3 domains). Working memory was associated with one functional domain. Conclusions Consistent with other studies, Indian patients with schizophrenia performed worse than controls on several domains of cognition and functional capacity; these domains were correlated. Speed of processing and verbal learning are most frequently associated with functional capacity indices and should be targeted to improve skills of daily living among persons with SZ.