The present study aimed at examining the longitudinal course of neuropsychological impairments in schizophrenia patients during the stabilization phase of the illness. Cognitive functioning of 151 schizophrenia patients was assessed at baseline, 9-month, and 15-month follow-up with a comprehensive battery of cognitive tests. Cognitive performance of 40 matched controls was also examined at baseline and follow-up in order to control for effects of repeated testing. We found significant improvements in memory, attention, and global cognitive functioning from baseline to 9-month follow-up. Abstraction was stable at a relatively normal level. Global cognitive functioning remained at 9-month follow-up one standard deviation below normative level. Improvements in patients' cognitive performance between the 9-month and the 15-month follow-up were fewer and less pronounced. The present study implies that schizophrenia is a static encephalopathy with trait and state dependent cognitive components particularly in the attention and memory domain. The statistically and clinically significant cognitive improvements should be ground for clinical optimism.