Objective: Intranasal administration of the neuropeptide oxytocin (OT) is associated with significant improvements in social cognition in individuals with schizophrenia (SZ). However, few studies have examined whether endogenous peripheral OT levels also predict social cognition in SZ. The current study examined whether plasma OT levels predicted performance on a higher-level social cognition task that that requires inferential processes and knowledge not directly presented in social stimuli. Method: Participants included 31 individuals with SZ and 21 demographically matched healthy controls (CN). The MATRICS Consensus Cognitive Battery was administered to assess neuropsychological impairment in relation to 7 domains (processing speed, attention/vigilance, working memory, verbal learning, visual learning, reasoning/problem solving, and social cognition). Plasma OT levels were measured via radioimmunoassay. Results: SZ and CN did not differ on mean OT levels. SZ demonstrated greater impairment than CN on all 7 MCCB domains. In CN, higher OT was associated with increased social cognition, r(19) = 0.47, p = 0.03. In SZ, higher OT was associated with greater processing speed, r(29) = 0.43, p = 0.02, increased working memory, r(29) = 0.47, p = 0.01, and improved social cognition, r(29) = 0.39, p = 0.03. Conclusion(s): The significant association between OT and social cognition in both CN and SZ highlights the importance of endogenous OT levels as a biological predictor of social cognition, irrespective of clinical status. Significant associations between plasma OT and general neurocognition may reflect either an anxiolytic effect of plasma OT that results in better neurocognitive performance, or OT's action on dopamine and enhancement of dopamine tone that results in improved cognition.