Objective: Long-term psychological care and frequent hospitalizations for individuals with schizophrenia are due, in part, to difficulty completing every day activities, particularly those that require social skills. Theory of Mind (ToM; a domain of social cognition requiring the ability to infer the content of one's own and other's mental states) has been shown to be reduced among people diagnosed with schizophrenia-spectrum disorders and has been linked to completion of social activities. However, within the inpatient population, the relative effect of ToM on every day functioning has not been studied. The present study investigated the relative effect of ToM on social capacity among inpatients with schizophrenia-spectrum disorders. 2. Method: Thirty-eight inpatients diagnosed with schizophrenia or schizoaffective disorder were recruited. A correlational design was employed to assess the strength of relationships between predictor (ToM, neurocognition, length of hospital stay, clinical symptoms, premorbid intellectual functioning, and demographic variables) and criterion (social capacity) variables. 3. Results: Symptoms of disorganization (β = −3.01, p < .01) and ToM (β = 1.88, p < .01) were the strongest predictors and explained 52% of the variance in social functioning (Adjusted R2 = .52, F(1,35) = 21.19, p < .01). When clinical symptoms were removed from the model, neurocognition became the most significant predictor (β = .919, p < .01). 4. Conclusion: These results suggest that among inpatients with schizophrenia, disorganization plays a large role in social functioning and may serve as a mediator and/or moderator to neurocognition. Social cognition, specifically the ability to quickly and automatically attribute mental states, is more important to social functioning than severity of delusions and hallucinations and is a likely candidate for remediation.