The aim of this study was to see whether and how cognition predicts outcome in recent-onset schizophrenia in a large range of domains such as course of illness, self-care, interpersonal functioning, vocational functioning and need for care. At inclusion, 115 recent-onset patients were tested on a cognitive battery and 103 patients participated in the follow-up 2 years after inclusion. Differences in outcome between cognitively normal and cognitively impaired patients were also analysed. Cognitive measures at inclusion did not predict number of relapses, activities of daily living and interpersonal functioning. Time in psychosis or in full remission, as well as need for care, were partly predicted by specific cognitive measures. Although statistically significant, the predictive value of cognition with regard to clinical outcome was limited. There was a significant difference between patients with and without cognitive deficits in competitive employment status and vocational functioning. The predictive value of cognition for different social outcome domains varies. It seems that cognition most strongly predicts work performance, where having a cognitive deficit, regardless of the nature of the deficit, acts as a rate-limiting factor.