Functioning is recognized as a key treatment goal in alleviating the burden of schizophrenia. Psychological interventions can play an important role in improving functioning in this population, but the evidence on their efficacy is limited. We therefore aimed to evaluate the effect of psychological interventions in functioning for patients with schizophrenia. To conduct this systematic review and meta-analysis, we searched for published and unpublished randomized controlled trials (RCTs) in EMBASE, MEDLINE, PsycINFO, BIOSIS, Cochrane Library, WHO International Clinical Trials Registry Platform (ICTRP), ClinicalTrials.gov and the Study register of the Cochrane Schizophrenia Group. The outcome functioning was measured with validated scales. We performed random-effects pairwise meta-analysis to calculate standardized mean differences (SMDs) with 95% confidence intervals (CIs). We included 58 RCTs (5048 participants). Psychological interventions analyzed together (SMD =  – 0.37, 95% CI  – 0.49 to  – 0.25), cognitive behavioral therapy (30 RCTs, SMD =  – 0.26, 95% CI  – 0.39 to  – 0.12), and third wave cognitive-behavioral therapies (15 RCTs, SMD =  – 0.60, 95% CI  – 0.83 to  – 0.37) were superior to control in improving functioning, while creative therapies (8 RCTs, SMD = 0.01, 95% CI  – 0.38 to 0.39), integrated therapies (4 RCTs, SMD =  – 0.21, 95% CI  – 1.20 to 0.78) and other therapies (4 RCTs, SMD =  – 0.74, 95% CI  – 1.52 to 0.04) did not show a benefit. Psychological interventions, in particular cognitive behavioral therapy and third wave cognitive behavioral therapies, have shown a therapeutic effect on functioning. The confidence in the estimate was evaluated as very low due to risk of bias, heterogeneity and possible publication bias.