Cognitive function is markedly impaired in most patients with schizophrenia. Antecedents of this impairment are evident in childhood. The cognitive disability is nearly fully developed at the first episode of psychosis in most patients. The contribution of cognitive impairment to outcome in schizophrenia, especially work function, has been established. Preliminary results indicate that cognitive function, along with disorganization symptoms, discriminate schizophrenia patients who are able to work full-time from those who are not. Typical neuroleptic drugs lack the ability to improve the various domains of cognitive function impaired in schizophrenia. Atypical antipsychotic drugs pharmacologically related to clozapine-quetiapine, olanzapine, risperidone, sertindole, and ziprasidone--share the ability to produce fewer extrapyramidal symptoms than typical neuroleptic drugs and more potent antagonism of serotonin2a relative to dopamine2 receptors. However, they have a number of different clinical effects. We have identified all the studies of clozapine, olanzapine, and risperidone that provide data on their effects on cognition in schizophrenia. Data for each drug are reviewed separately in order to identify differences among them in their effects on cognition. Twelve studies that report cognitive effects of clozapine are reviewed. These studies provide (1) strong evidence that clozapine improves attention and verbal fluency and (2) moderate evidence that clozapine improves some types of executive function. However, results of the effects of clozapine on working memory and secondary verbal and spatial memory were inconclusive. Risperidone has relatively consistent positive effects on working memory, executive functioning, and attention, whereas improvement in verbal learning and memory was inconsistent. Preliminary evidence presented here suggests that olanzapine improves verbal learning and memory, verbal fluency, and executive function, but not attention, working memory, or visual learning and memory. Thus, atypical antipsychotic drugs as a group appear to be superior to typical neuroleptics with regard to cognitive function. However, available data suggest that these drugs produce significant differences in specific cognitive functions. These differences may be valuable adjunctive guides for their use in clinical practice if cognitive improvements reach clinical significance. The effects of the atypical antipsychotic drugs on cholinergic and 5-HT2a-mediated neurotransmission as the possible basis for their ability to improve cognition are discussed. It is suggested that the development of drugs for schizophrenia should focus on improving the key cognitive deficits in schizophrenia: executive function, verbal fluency, working memory, verbal and visual learning and memory, and attention.