Transitive inference (TI) describes a fundamental operation of relational (e.g., explicit) memory organization [Eichenbaum, H., Cohen, N.J., 2001. From Conditioning to Conscious Recollection: Memory Systems of the Brain. Oxford Univ. Press]. Here we investigate TI in schizophrenia (SZ), a neurocognitive disorder associated with explicit but not implicit memory dysfunction. SZ patients and healthy controls were trained on a series of learned discriminations that were hierarchically organized (A>B, B>C, C>D, and D>E). They were then tested on each training pair and two novel "inference" pairs: AE, which can be evaluated without consideration of hierarchical relations, and BD, which can only be evaluated by hierarchical relations. SZ patients and controls successfully learned the training pairs and correctly responded to the nonrelational AE pairs. However, SZ patients were less accurate than controls in responding to the relational BD pairs, consistent with the hypothesis that higher-level memory processes associated with relational memory organization are impaired in SZ. The results are discussed with respect to the relational memory model and candidate neuro-cognitive mechanisms of TI.