The nature, neural underpinnings, and etiology of deficits in verbal declarative memory in patients with schizophrenia remain unclear. To examine the contributions of genes and environment to verbal recall and recognition performance in this disorder, the California Verbal Learning Test was administered to a large population-based Finnish twin sample, which included schizophrenic and schizoaffective patients, their non-ill monozygotic (MZ) and dizygotic (DZ) co-twins, and healthy control twins. Compared with controls, patients and their co-twins showed relatively greater performance deficits on free recall compared with recognition. Intra-pair differences between patients and their non-ill co-twins in hippocampal volume and memory performance were highly positively correlated. These findings are consistent with the view that genetic influences are associated with reduced verbal recall in schizophrenia, but that non-genetic influences further compromise these abnormalities in patients who manifest the full-blown schizophrenia phenotype, with this additional degree of disease-related declarative memory deficit mediated in part by hippocampal pathology.