To test the hypothesis that rapid eye movement (REM) sleep in schizophrenic patients is associated with cognitive function, we studied 18 schizophrenic inpatients by means of electroencephalograms taken during sleep in their own hospital beds after a minimum 2-wk medication withdrawal period. Patients underwent neuropsychological tests to measure memory function and other aspects of cognitive performance. REM sleep measures demonstrated positive and negative correlations with cognition and memory measures, depending on when REM occurred after sleep onset. Minutes of REM sleep and REM density in the first period correlated negatively with performance, while REM minutes occurring after the first REM period correlated positively with neuropsychological performance. Further work should test whether phasic REM sleep regulation at the beginning of the night plays a compensatory role for neuropsychological dysfunction in schizophrenics.