Psychiatric patients, particularly schizophrenics, tend to be less accurate decoders of facial expressions than normals. The involvement of three basic information processing stages in this deficit was investigated: attention; encoding; and processing. Psychiatric inpatients, classified by diagnosis and severity of pathology, and nonpatient controls were administered seven facial cue decoding tasks. Orientation of attention was assessed through rate of diversion of gaze from the stimuli. Encoding was assessed using simple tasks, requiring one contrast of two facial stimuli and selection from two response alternatives. Processing was assessed using a more complex task, requiring several contrasts between stimulus faces and selection from numerous response alternatives. Residualized error scores were used to statistically control for effects of attention on task performance. Processing task performance was evaluated using ANCOVA to control for effects of encoding. Schizophrenics were characterized by generalized information processing deficit while affective disorder subjects evidenced impairment only in attending. Attention impairments in both groups were related to severity of psychopathology. Problems in encoding and processing were related only to a schizophrenic diagnosis. Their decoding deficits appeared attributable to general visuospatial discrimination impairment rather than repression-sensitization defenses or the affective connotation of cues. Adequacy of interpersonal functioning was associated with measures …