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Individuals with schizophrenia demonstrate broad impairments in neurocognitive functioning as measured through laboratory-based tasks. Neuropsychological measures depend on rapid instruction-based task learning (RITL), the ability to rapidly translate task instruction into goal-directed behavior. Here, the authors present the first known investigation of RITL in schizophrenia and aim to test whether RITL deficits exist in schizophrenia, are associated with abnormal brain activation, and contribute to the generalized cognitive deficit. Twenty-nine schizophrenia participants and 31 healthy controls completed a previously established RITL task while in a functional magnetic resonance imaging (fMRI) scanner and completed a brief assessment of general cognition outside the scanner. Patients were significantly impaired in RITL accuracy and reaction time (RT). Compared to controls, patients had reduced activation of the caudate and left inferior frontal junction (LIFJ) while viewing task instructions, and across all subjects, lower activation in these regions was associated with worse RITL performance. During practice trials, activation in the anterior insula, LIFJ, and middle frontal gyrus also related to performance. RITL ability was robustly associated with general cognitive ability, explained a significant proportion of the variance in the generalized cognitive deficit, and was associated with LIFJ activity during RITL instructions. These results indicate that the ability to rapidly learn task instructions is impaired in schizophrenia and associated with abnormal activation of the caudate and LIFJ. Abnormalities in RITL represent a critical cognitive facet for understanding the broad profile of cognitive deficits in schizophrenia.