Recent research suggests that disturbances in social and occupational functioning in individuals with schizophrenia may be more influenced by the severity of cognitive deficits than by the severity of symptoms such as hallucinations and delusions. In this article, I review evidence that one component of cognitive dysfunction in schizophrenia is a deficit in working memory, associated with disturbances in the dopamine system in dorsolateral prefrontal cortex. I suggest that although the cognitive deficits in schizophrenia include working memory dysfunction, because they arise from a disturbance in executive control processes (e.g., the representation and maintenance of context), they extend to a range of cognitive domains. Finally, I discuss the need for further research on the ways in which contextual processing deficits may influence other aspects of this illness, including emotional processing.