Background Early visual processing deficits are reliably detected in schizophrenia and show relationships to poor real-world functioning. However, the nature of this relationship is complex. Theoretical models and recent studies using statistical modeling approaches suggest that multiple intervening factors are involved. We previously reported that a direct and significant association between visual processing and functional status was mediated by a measure of social perception. The present study examined the contribution of negative symptoms to this model.Method We employed structural equation modeling (sem) to test several models of outcome, using data from 174 schizophrenia out-patients. Specifically, we examined the direct and indirect relative contributions of early visual processing, social perception and negative symptoms to functional outcome.Results First, we found that, similar to social perception, a measure of negative symptoms mediated the association between visual information processing and functional status. Second, we found that the inclusion of negative symptoms substantially enhanced the explanatory power of the model. Notably, it was the experiential aspect of negative symptoms (avolition and anhedonia) more than the expressive aspect (affective flattening and alogia) that accounted for significant variance in functional outcome, especially in the social component of the construct of functional outcome.Conclusions Social perception and negative symptoms play relevant roles in functional impairment in schizophrenia. Both social perception and negative symptoms statistically mediate the connection between visual processing and functional outcome. However, given the lack of association between social perception and negative symptoms, these constructs appear to have an impact on functioning through separate pathways. © 2010 Cambridge University Press.