Disability is pervasive in schizophrenia and is refractory to current medication treatments. Inability to function in everyday settings is responsible for the huge indirect costs of schizophrenia, which may be as much as three times larger than direct treatment costs for psychotic symptoms. Treatments for disability are therefore urgently needed. In order to effectively treat disability, its causes must be isolated and targeted; it seems likely that there are multiple causes with modest overlap. In this paper, we review the evidence regarding the prediction of everyday disability in schizophrenia. We suggest that cognition, deficits in functional capacity, certain clinical symptoms, and various environmental and societal factors are implicated. Further, we suggest that health status variables, recently recognized as pervasive in severe mental illness, may also contribute to disability in a manner independent from these other better-studied causes. We suggest that health status be considered in the overall prediction of real-world functioning and that interventions aimed at disability reduction targeting health status may be needed, in addition to cognitive enhancement, skills training, and public advocacy for better services.