Regulatory guidance for schizophrenia cognition clinical trials requires that the assessment of cognitive change is accompanied by a functionally meaningful endpoint. However, currently available measures are challenged by resistance to change, psychometric weaknesses, and for interview-based assessments, dependence upon the presence of an informant. The aims of the current study were to: 1) assess the validity, sensitivity, and reliability of the Virtual Reality Functional Capacity Assessment Tool (VRFCAT) as a measure of functional capacity; 2) determine the association between performance on the VRFCAT and performance on the MATRICS Consensus Cognitive Battery (MCCB); and 3) compare the metrics of the VRFCAT with the UCSD Performance-based Skills Assessment (UPSA). 167 patients with schizophrenia and 166 healthy controls completed the VRFCAT, UPSA, and the MCCB at baseline. The VRFCAT and UPSA were completed again at follow-up. The VRFCAT, MCCB, and UPSA were very sensitive to impairment in schizophrenia (d=1.16 to 1.22). High test-retest reliability was demonstrated for VRFCAT total completion time and the UPSA total score in patients (ICC=0.81 and 0.78, respectively). The UPSA demonstrated significant practice effects in patients (d=0.35), while the VRFCAT did not (d=−0.04). VRFCAT total completion time was correlated with both UPSA (r =−0.56, p <0.0001 for patients and −0.58, p <0.0001 for controls) and MCCB Composite (r =−0.57, p <0.0001 for patients and −0.68, p <0.0001 for controls). The VRFCAT is a highly reliable and sensitive measure of functional capacity with associations to the UPSA and MCCB. These results provide encouraging support for a computerized functional capacity assessment for use in schizophrenia.