ABSTRACT This R01 application involves a confirmatory efficacy clinical trial of our innovative treatment approach to improving cognition in schizophrenia, using an experimental therapeutic design that NIMH has advocated. Our intervention approach combines neurotrophin-releasing aerobic exercise training with neuroplasticity-based cognitive training to enhance the impact of cognitive training on cognition and functional outcome. Both cognitive training and exercise address the NIMH strategic research priorities for creating innovative interventions that can be “disseminated broadly” and “readily taught to the existing workforce with minimal cost.” Cognitive remediation and physical exercise have each been shown separately to have promise for improving cognitive deficits in schizophrenia, but used separately yield moderate effects in chronic schizophrenia patients. We will use brain-derived neurotrophic factor (BDNF) as our target and cognition and functional outcome as our clinical outcomes. We hypothesize that the increases in BDNF associated with regular aerobic exercise provide a platform which allows neuroplasticity-based cognitive training to enhance cognition to a greater degree than is typically observed in studies of cognitive training alone. We hypothesize that combining physical exercise with cognitive training will produce larger cognitive and functional improvements, relative to cognitive training alone. This confirmatory efficacy clinical trial is guided by evidence from our current R34 pilot randomized controlled trial comparing the combined treatment with cognitive training without physical exercise. We find compelling evidence of BDNF target engagement, differential improvement in cognition and functional outcome, and prediction of later outcome from initial BDNF gain that strongly supports the movement to a fully powered confirmatory efficacy clinical trial. Cognitive deficits in persons with schizophrenia present an enormous challenge to successful return to functioning in the community. We target the period shortly after a first episode of schizophrenia to maximize the generalization of cognitive improvement to real-world functional outcome, before chronic disability is established. The cognitive training plus aerobic exercise intervention has the potential to examine a hypothesized mechanism of action and to make a meaningful difference in the lives of individuals with severe mental illness.