This study proposes to enroll 120 men and women with schizophrenia or schizoaffective disorder in a five-year investigation to compare work therapy alone with work therapy augmented by cognitive enhancement training. The cognitive enhancement condition has 4 elements: a) feedback to patients about their cognitive strengths and weaknesses from the baseline cognitive assessment; 2) 150 sessions of cognitive retraining employing computer-based hierarchically arranged exercises for memory, attention, and executive function; 3) a weekly group to improve verbal expression and social information processing; and 4) cognitively oriented work performance feedback in a weekly group with goal-setting and problem-solving. The work only condition will include 2 non-cognitive groups to control for non-specific effects. The work therapy program for both conditions will provide paid work activity ($6.00/hr.) for up to 20 hours per week in an accommodating setting with appropriate work service supports. Randomization into condition will be stratified by baseline cognitive functioning. Subjects will be provided with 12 months of work plus the procedures of their randomized condition. They will then be allowed to continue with work services for an additional 12 months. Clinical quality of life, neuropsychological, and rehabilitation effects will be assessed at 1- and 2-year follow-up. The two primary aims are 1) to determine whether cognitive enhancement training improves functional outcomes for this population and whether cognitive enhancement is especially needed to maintain work functioning for subjects with severe cognitive impairment; and 2) to determine whether paid work activity, which has demonstrated efficacy in veteran samples, is effective for a community sample of men and women. Two secondary aims are 1) to determine whether there are significant gender differences in the predictors, process and outcome of cognitive enhancement and work therapy; and 2) whether the provision of these services is cost effective from the point of view of the provider, the consumer and family, and society.