With new treatments targeting features of schizophrenia associated with functional disability, there is a need to evaluate the validity of ratings of everyday outcomes. It is unknown whether patients can validly self-report on aspects of their functional status, which would be a potentially economical method for obtaining outcome data. In this study, 67 older schizophrenia outpatients provided self-ratings of everyday real-world functioning using the specific levels of functioning scale (SLOF). They were also administered assessments of neuropsychological performance, performance-based measures of functional capacity and social skills, clinical symptoms, and quality of life. Case managers, unaware of other ratings, also generated SLOF ratings. Based on discrepancy scores, participants were categorized as accurate raters (n = 24), underestimators (n = 16), or overestimators (n = 27) of their functional status as compared to case managers' ratings. Patients' self-rated functional status was correlated with their subjective quality of life, but remarkably unassociated with case manager ratings of functional status or their own performance on functional capacity or social skills measures. Case manager ratings, however, were highly correlated with performance on functional capacity and social skills measures. Patients who underestimated their real world performance had better cognitive skills and greater self-rated depression than those who overestimated. Accurate raters demonstrated greater social skills than both overestimators and underestimators, while overestimators were most cognitively and functionally impaired. Accurate ratings of everyday outcomes in schizophrenia may require systematic observation of real world outcomes or performance-based measures, as self-reports were inconsistent with objective information.