Cognitive impairment is a core characteristic of schizophrenia, but its underlying neural mechanisms remain poorly understood. Reduced brain-derived neurotrophic factor (BDNF), a protein critical for neural plasticity and synaptic signaling, is one of the few molecules consistently associated with cognitive deficits in schizophrenia although the etiological pathway leading to BDNF reduction in schizophrenia is unclear. We examined microRNA-195 (miR-195), a known modulator of BDNF protein expression, as a potential mechanistic component. One-hundred and eighteen first-episode patients with schizophrenia either antipsychotic medication-naïve or within two weeks of antipsychotic medication exposure and forty-seven age- and sex-matched healthy controls were enrolled. MiR-195 and BDNF mRNA and BDNF protein levels in peripheral blood were tested. Cognitive function was assessed using the MATRICS Consensus Cognitive Battery (MCCB). MiR-195 was significantly higher (p = 0.01) whereas BDNF mRNA (p < 0.001) and protein (p = 0.016) levels were significantly lower in patients compared with controls. Higher miR-195 expression was significantly correlated to lower BDNF protein levels in patients (partial r = -0.28, p = 0.003) and lower BDNF protein levels were significantly associated with poorer overall cognitive performance by MCCB and also in speed of processing, working memory, and attention/vigilance domains composite score (p = 0.002-0.004). The subgroup of patients with high miR-195 and low BDNF protein showed the lowest level of cognitive functions, and miR-195 showed significant mediation effects on cognitive functions through BDNF protein. Elevated miR-195 may play a role in regulating BDNF protein expression thereby influencing cognitive impairments in schizophrenia, suggesting that development of cognition enhancing treatment for schizophrenia may consider a micro-RNA based strategy.