Research in psychopathology and the cognitive neurosciences suggests new applications in psychiatric rehabilitation. Analysis of performance deficits on laboratory tasks can contribute to treatment planning, individual and family counseling, and staff consultation, much like it does in cases of brain injury and other types of central nervous system neuropathology. Recognition of the nature of cognitive impairments in schizophrenia can inform design of psychosocial techniques such as social and living skills training. Cognitive impairments are increasingly seen as potential targets for pharmacological and psychosocial treatment and rehabilitation. In this article, three key issues for application of cognitive technology in psychiatric rehabilitation of schizophrenia and related disorders are formulated as straightforward, clinically relevant questions: (1) What is the prognostic significance of cognitive impairment in acute psychosis? (2) Can cognitive functioning improve in the chronic, residual course? (3) How does cognitive improvement benefit other aspects of recovery and rehabilitation? These questions are addressed through review of previous findings and new multivariate analyses of cognitive functioning in the acute, post-acute, and chronic residual phases of schizophrenia.