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This study examined conceptual rule learning (RL) deficit in male schizophrenic Ss categorized into three groups as defined by Whitaker Index of Schizophrenic Thinking (WIST). Ss were administered a conjunctive, disjunctive, conditional or biconditional rule learning task, WIST, and Shipley-Hartford Memory Scale. It was shown that: (a) the WIST reliably differentiates among three levels of thought disorder as reflected by a deficit in inter-problem transfer of rule learning; (b) certain WIST and Shipley parameters reliably predict RL performance; and (c) phenothiazine dosage levels show no influence on the WIST and no correlation with RL. The findings indicate that cognitive dysfunction in schizophrenics is evidenced by limited inductive reasoning, insufficient channel capacity for filtering out irrelevant information, and inability to gain from antecedent RL experience. Principal locus of schizophrenic thought disorder is examined within a stimulus encoding-information processing paradigm.