BACKGROUND: Cognitive impairment has always been regarded as an important characteristic of schizophrenia. Many domains of cognition are disrupted with varying degrees of deficit: attention, executive functions, verbal and visuospatial working memory, learning, and memory. However, it is only recently that cognitive dysfunction has been recognized as a primary and enduring core deficit in schizophrenia (rather than the previous focus on positive and negative symptoms). OBJECTIVE: This article discusses cognitive impairment and the therapeutic effects of newer antipsychotic agents on cognitive functioning in patients with schizophrenia. CONCLUSIONS: Cognitive dysfunction occurs before the first psychotic episode and persists throughout the course of the illness. It involves every aspect of cognitive functioning and has an important impact on long-term social and occupational outcomes. Improvement of cognitive functioning by antipsychotic treatment can be due indirectly to the improvement of therapeutic profiles of the newer antipsychotic agents (eg, higher efficacy on positive and negative symptoms, fewer side effects, less anticholinergic effects) or directly to effects on cerebral functioning (eg, by restoring dopamine prefrontal activity). However, further research is needed regarding the therapeutic effects of the newer antipsychotic drugs on cognitive functioning and their impact on psychosocial outcome. Although newer medications may improve cognitive functioning, they do not normalize neurocognitive deficits in schizophrenia. In addition, various nonpharmacologic, psychological interventions have been used in the rehabilitation of patients with cognitive deficits.