Objective: Deficits in functional outcome have been identified in schizophrenia (SZ) and bipolar disorder (BD) and have been linked to positive and negative symptomatology. Impairments in various modalities of early sensory perception have also been found across disorders. The current study investigates the relationship between basic visual processing and functional outcome in individuals with SZ and BD. Method: Participants included 51individuals with SZ or BD (51% female; mean age = 43.7; mean education = 12.2) rated on current symptoms using the Scale for the Assessment of Negative Symptoms (SANS) and the Scale for the Assessment of Positive Symptoms (SAPS). Basic visual perception was measured with a face discrimination task where individuals were asked to indicate whether two inverted faces were the same or different. The UCSD performance based skills assessment (UPSA) was used to assess functional outcome. Results: Hierarchical multiple regression was conducted with UPSA total score as the dependent variable. SAPS and SANS scores were entered into the model at stage one, accounting for 14% of the variance in UPSA performance. When face discrimination was added to the model, it remained the only significant predictor, accounting for an additional 14% of the variance. Conclusion: Findings indicate that basic visual perception is predictive of functional outcomes beyond current symptom ratings in individuals with SZ and BD. Further research should be conducted to ascertain neural mechanisms associated with the relationship found in the current study and the potential for basic visual perception deficits as a therapeutic targets for improving everyday functioning in individuals with psychotic disorders.