Gaze perception is a basic building block of social cognition, which is impaired in schizophrenia and contributes to functional outcomes. However, few studies have investigated its neural underpinnings and relation to broader social cognitive abilities. We address this gap. We recruited 77 schizophrenia patients and 71 controls, who completed measures of social cognition (e.g., emotion recognition, mentalizing). During fMRI, participants (N = 116) completed a gaze task, where they judged whether face images with varying gaze angles were self-directed or averted; as a control condition, participants identified stimulus gender. Brain activation estimates were extracted based on 1) gaze-perception vs. gender-identification, 2) parametric modulation by perception of stimuli as self-directed vs. averted, and 3) parametric modulation by stimulus gaze angle. Latent neural factors were computed to predict social cognition performance and diagnosis. Preferential activation to gaze perception (vs. gender identification) was observed throughout default, salience, and sensory networks, which was modulated by stimulus gaze angle and perception of stimuli as self-directed vs. averted. Despite clear social cognitive deficits, patients showed no significant differences in brain activation. Four of five neural factors predicted social cognition performance, effects remained when controlling for group, and effects did not differ by group. Findings provide evidence of default and salience network nodes—such as dorsal medial prefrontal cortex, superior temporal sulcus, and insula—as neural substrates of gaze perception, which were associated with individual differences in social cognition. Findings are discussed in the context of clinical heterogeneity and dimensional psychopathology.