Facial emotion recognition deficits have been consistently demonstrated in schizophrenia and can impair socio-occupational functioning in these patients. Treatments to improve these deficits in antipsychotic-stabilized patients have not been well studied. Yoga therapy has been described to improve functioning in various domains in schizophrenia; however, its effect on FERD is not known. Antipsychotic-stabilized patients randomized to receive Yoga (n=27), Exercise (n=17) or Waitlist group (n=22) were assessed at baseline, 2nd month, and 4th month of follow-up by raters blind to group status. Assessments included Positive and Negative Syndrome Scale (PANSS), Socio-Occupational Functioning Scale (SOFS), and Tool for Recognition of Emotions in Neuropsychiatric DisorderS (TRENDS). There was a significant positive correlation between baseline FERD and socio-occupational functioning (r=0.3, P=0.01). Paired samples t test showed significant improvement in positive and negative symptoms, socio-occupational functioning and performance on TRENDS (P<0.05) in the Yoga group, but not in the other two groups. Maximum improvement occurred at the end of 2 months, and improvement in positive and negative symptoms persisted at the end of 4 months. Yoga therapy can be a useful add-on treatment to improve psychopathology, FERD, and socio-occupational functioning in antipsychotic-stabilized patients with schizophrenia.