Objective: Autism and schizophrenia are characterized by impairments in social cognition and functioning. They can co-occur at both the trait/symptom and diagnostic levels. We investigated the concurrent effect of autism and psychotic symptom severity on social cognition and functioning in schizophrenia. Method: Individuals with schizophrenia or schizoaffective disorder were included (N = 81; 32 women). Symptoms were measured with the Positive and Negative Syndrome Scale using the Positive subscale (PANSSpos; Kay, Fiszbein, & Opler, 1987) and the PANSS Autism Severity Score (PAUSS; Kästner et al., 2015). Theory of mind (ToM) was assessed with the Movie for the Assessment of Social Cognition (MASC; Dziobek et al., 2006), which yields scores for three error types: overmentalizing, undermentalizing, and no mentalizing. Functioning was assessed with the Global Assessment of Functioning (GAF-f; Pedersen, Hagtvet, & Karterud, 2007) and the Social Functioning Scale (SFS; Birchwood, Smith, Cochrane, Wetton, & Copestake, 1990). The sample was bimodally distributed and therefore divided into low and high PAUSS groups. We used generalized linear models to examine the effect of PANSSpos, PAUSS, and their interaction on GAF-f, SFS, and MASC scores. Results: For the entire cohort, the PANSSpos × PAUSS interaction was significantly associated with better GAF-f (p = .005), SFS (p = .029), and overall ToM (p = .035), and for the high-PAUSS group, with reduced overmentalizing errors (p = .002), resulting in better overall ToM. Conclusion: Concurrent elevated levels of autism and positive psychotic symptoms seem to benefit functioning and social cognition in schizophrenia. The results are consistent with the diametric model, which posits that autism and schizophrenia are characterized by opposing patterns in mentalizing, and promote the radical idea that the presence of both disorders may be associated with attenuated impairments.