Abstract This double-blind study evaluated change in cognitive performance and functional capacity in lurasidone and quetiapine XR-treated schizophrenia patients over a 6-week, placebo-controlled study, followed by a 6-month, double-blind extension. Cognitive performance and functional capacity were assessed with the CogState computerized cognitive battery and the UPSA-B. Analyses were conducted for all subjects, as well as the subsample whose test scores met prespecified validity criteria. No statistically significant differences were found for change in the composite neurocognitive score for lurasidone (80mg/day and 160mg/day) groups, quetiapine XR and placebo in the full sample at week 6. For the evaluable sample (N=267), lurasidone 160mg was superior to both placebo and quetiapine on the neurocognitive composite, while lurasidone 80mg, quetiapine XR, and placebo did not differ. UPSA-B scores were superior to placebo at 6 weeks for all treatments. In the double-blind extension study, analysis of the full sample showed significantly better cognitive performance in the lurasidone (40–160mg) group compared to the quetiapine XR (200–800mg) group at both 3 and 6 months. Cognitive and UPSA-B total scores were significantly correlated at baseline and for change over time. This is the first study to date where the investigational treatment was superior to placebo on both cognitive assessments and a functional coprimary measure at 6 weeks, as well as demonstrated superiority to an active comparator on cognitive assessments at 6 weeks and at 6 months of extension study treatment. These findings require replication, but are not due to practice effects, because of the placebo and active controls.