The Managing Emotions branch of the Mayer-Salovey-Caruso Emotional Intelligence Test (MSCEIT-ME) was included within the MATRICS Consensus Cognitive Battery (MCCB) as the measure of social cognition, although limited research has examined its associations with psychosocial functioning in people with schizophrenia or other severe mental illnesses. This secondary analysis with 107 participants examined what the MSCEIT-ME contributes to our understanding of functioning in this population, and whether it uniquely predicts psychosocial functioning after controlling for performance on the other MCCB tests and negative symptoms. Performance on the MSCEIT-ME was significantly correlated with all three MCCP factors (processing speed, attention/working memory, learning) within schizophrenia-schizoaffective disorder, bipolar disorder, and other mixed diagnoses groups. Better performance on MSCEIT-ME was associated with better psychosocial functioning on the Quality of Life Scale (QLS) in the schizophrenia-schizoaffective disorder group, but not in the bipolar or other mixed diagnoses groups. In addition, in the schizophrenia-schizoaffective disorder group, after controlling for demographic characteristics in stepwise multiple regression analyses, MSCEIT-ME was the only significant predictor of the QLS total score and the QLS interpersonal relations and intrapsychic foundations subscales, with none of the MCCB factors entering any of the regression models. The MSCEIT-ME may reflect a unique aspect of social cognition that is related to impaired psychosocial functioning in schizophrenia and is not tapped by the other cognitive tests on the MCCB. Further research on the MSCEIT-ME could provide unique insights into the social functioning problems in schizophrenia.