Individuals with schizophrenia demonstrate episodic memory (EM) deficits and abnormal EM-related brain activity. Experimental encoding manipulations significantly benefit memory performance in schizophrenia, suggesting that a strategic processing deficit may contribute to memory impairment. However, few studies have investigated the combined effects of encoding and retrieval strategies on EM in schizophrenia. The current study examined the impact of encoding and retrieval strategies on associative memory and brain activity in schizophrenia. We also assessed the role of verbal processing ability in response to strategic memory interventions in schizophrenia. Behavioral and functional neuroimaging data were collected from 23 participants with schizophrenia and 24 comparison subjects while performing associative memory encoding and recall tasks. Behaviorally, both schizophrenia participants and controls benefited from memory strategies and showed significant associations between verbal processing ability and recall. Additionally, among schizophrenia participants, encoding strategy use was associated with enhanced brain activity in multiple brain areas. Schizophrenia participants also demonstrated significant associations between verbal processing ability and encoding-related brain activity in prefrontal cortex. Findings suggest that memory performance and brain activity in schizophrenia can be enhanced via strategic manipulations, and individual differences in cognitive abilities in schizophrenia can affect behavioral and neurobiological responses to strategic memory interventions.