Verbal fluency and verbal memory have been reported to be diminished in patients with schizophrenia. These deficits could partially predict functional disability in this pathology. However, processing speed often mediates the relationship among cognitive processes in the disorder. Our goal was to analyse the influence of processing speed as mediator of the relation between verbal fluency–verbal memory and functional disability in chronic schizophrenia. We examined 90 hospitalized patients and 30 healthy controls (matched for gender, age and years of education). The neuropsychological battery included tests for verbal fluency, verbal memory, motor speed and processing speed. Outcome measures included Disability Assessment Schedule (DAS-WHO) and number of hospitalizations (NH). Results confirmed chronicity on clinical symptoms (PANSS total X =48.94+14.97 PANSS negative X =27.81+10.18, PANSS positive X =23.51+10.81) and impairment on functional disability (DAS-WHO X =13.62+4.28). As expected, verbal fluency was severely impaired in patients and significantly predicted functional outcome. Immediate and Delayed Verbal Memory were also severely impaired and predicted functional outcome. However, when processing speed was entered in the regression analyses the significance of verbal fluency and verbal memory decreased significantly. Sobel's equation was significant, suggesting full mediation. Our findings suggest that processing speed may be a central factor in the relation between cognitive symptoms and functional outcome in chronic schizophrenia.