Veterans with schizophrenia and schizoaffective disorder experience high levels of disability and poor community outcome, and these poor functional outcomes constitute a major public health concern. The treatment of schizophrenia spectrum disorders has shifted fundamentally from a focus on symptom reduction to a focus on recovery and improving aspects of functioning. Needed improvements in community outcome for patients with these disorders will not occur simply through better control of clinical symptoms. Instead, it is necessary to find new treatments that address the key determinants of poor functional outcome, including social cognition. Both basic (non-social) cognition and social cognition are considered key determinants of functional outcome for schizophrenia and schizoaffective disorder. Basic cognition includes the domains of: learning and memory, vigilance / attention, speed of processing, reasoning and problem solving, and working memory. Social cognition generally refers to mental operations that underlie social interactions, including perceiving, interpreting, managing, and generating responses to socially relevant stimuli, including the intentions and behaviors of others. As part of the investigators' previous Merit grant, they have developed a training program for social cognition and are in the process of validating it. Initial results suggest that the program improves performance on measures of social cognition and functional capacity.

In this study, the investigators will evaluate whether adding an in vivo component (training activities that occur in the community) to the current social cognition intervention facilitates generalization of training effects to community outcome and subjective satisfaction. Outcome measures of social cognition and functional capacity will be examined during the 12 week training program, and durability of benefits will be assessed at a 3-month follow up. Generalization to community functioning and subjective satisfaction will be assessed at the end of training and at the 3-month follow up. The investigators will enroll 105 patients across the 5 years of the study with random assignment to training group (social cognition intervention with in vivo exercises, social cognition intervention without in vivo exercises and control). Subjects will receive assessments at baseline, 6 weeks (mid-point), completion of training (12 weeks), and the 3-month follow up.

Inclusion Criteria:

All patients must be diagnosed with Schizophrenia, Schizoaffective Disorder, or Psychosis not otherwise specified (NOS) according to Diagnosis and Statistical Manual (DSM-IV) criteria. In addition, the subjects will meet the following criteria:

• Between 18 and 60 years of age
• Estimated premorbid intelligence quota > 70 (based on reading ability)
• Understand spoken English sufficiently to comprehend testing procedures
• Clinically stable (e.g., no inpatient hospitalization in the 8 weeks prior to enrollment, no significant changes in medication in the 4 weeks prior to enrollment, and none anticipated for the 3 months of participation)
• In sufficient health to be able to walk outdoors unaided for at least 15 minutes.

Exclusion Criteria:

• No clinically significant neurological disease as determined by medical history
• No history of serious head injury (e.g., loss of consciousness longer than 1 hour)
• No physical, cognitive, or language impairment of such severity as to adversely affect the validity of data
• No evidence of drug or alcohol dependence in the past six months, and not intoxicated at time of testing based on urine toxicology screen and saliva alcohol test strip. Subjects who test positive will not be disqualified but instead will be asked to return for testing on a different day. However, subjects who test positive on 3 consecutive occasions will be disqualified from the study.