BACKGROUND: Among individuals with schizophrenia, deficits in theory of mind (ToM) skills predict poor social functioning. Therefore, identifying the neural basis of ToM may assist the development of treatments that improve social outcomes. Despite growing evidence that the ventromedial prefrontal cortex (VMPFC) facilitates ToM skills among healthy individuals, methodological challenges, such as the influence of general cognitive deficits, have made it difficult to identify the relationship between ToM processing and VMPFC function in schizophrenia. METHODS: We used voxel-based morphometry and a multi-method behavioral assessment of ToM processing, including performance-based (Recognition of Faux Pas Test), self-report (Interpersonal Reactivity Index, Perspective-Taking), and interview-rated (Quality of Life Scale-Empathy score) ToM assessments, to investigate whether ToM skills were related to VMPFC gray matter volume (GMV). Standardized neuropsychological measures were used to assess global cognition. Twenty-one schizophrenia and 17 healthy control subjects participated. RESULTS: Between-group behavioral analyses showed that, as compared with healthy participants, schizophrenia participants had worse ToM performance and lower self-reported ToM processing in daily life. The between-group analysis of GMV showed that schizophrenia participants had less VMPFC GMV than healthy participants. Moreover, among schizophrenia participants, all three measures of ToM processing were associated with VMPFC GMV, such that worse ToM skills were related to less VMPFC GMV. This association remained strong for self-reported and interview-rated ToM skills, even when controlling for the influence of global cognition. CONCLUSIONS: The findings suggest that among individuals with schizophrenia, reduced VMPFC GMV is associated with deficits using ToM skills to enhance social relationships.