There is a growing empirical literature on psychosocial rehabilitation strategies for schizophrenia and other severe mental illnesses. Three of the best-supported and most promising approaches were reviewed: social skills training (SST), cognitive behavior therapy (CBT), and cognitive remediation (CR). Of the three, SST has the strongest empirical support and can be considered an evidence-based treatment. However, it is appropriate as a targeted treatment for social impairment, not as a broad based treatment for schizophrenia. CBT has only recently been applied to patients with psychotic disorders and the preliminary results are promising for reducing distress associated with residual psychotic symptoms. All but a handful of trials have been carried out in the context of the public health system in the UK with specially selected patients. Consequently, it is not yet clear if it would be effective in public health systems in the US, with highly impaired patients, or for patients with comorbid substance abuse. There is an extensive literature documenting that a variety of training techniques can improve performance on neuropsychological tests, and there is a growing literature of more clinically relevant CR trials that have produced small to medium effect sizes. No studies have yet demonstrated a clinically significant effect on community functioning. This is a promising area for further research, but CR, like CBT, does not have a sufficient evidentiary base for widespread dissemination to the public mental health system at this time.