The capacity for transitive inference (TI), a form of relational memory organization, is impaired in schizophrenia patients. In order to disambiguate deficits in TI from the effects of ambiguous reinforcement history and novelty, 28 schizophrenia and 20 nonpsychiatric control subjects were tested on newly developed TI and non-TI tasks that were matched on these 2 variables. Schizophrenia patients performed significantly worse than controls on the TI task but were able to make equivalently difficult nontransitive judgments as well as controls. Neither novelty nor reinforcement ambiguity accounted for the selective deficit of the patients on the TI task. These findings implicate a disturbance in relational memory organization, likely subserved by hippocampal dysfunction, in the pathophysiology of schizophrenia.