While many with schizophrenia spectrum disorders experience difficulties understanding the feelings of others, little is known about the psychological antecedents of these deficits. To explore these issues we examined whether deficits in mental state decoding, mental state reasoning and metacognitive capacity predict performance on an emotion recognition task. Participants were 115 adults with a schizophrenia spectrum disorder and 58 adults with substance use disorders but no history of a diagnosis of psychosis who completed the Eyes and Hinting Test. Metacognitive capacity was assessed using the Metacognitive Assessment Scale Abbreviated and emotion recognition was assessed using the Bell Lysaker Emotion Recognition Test. Results revealed that the schizophrenia patients performed more poorly than controls on tests of emotion recognition, mental state decoding, mental state reasoning and metacognition. Lesser capacities for mental state decoding, mental state reasoning and metacognition were all uniquely related emotion recognition within the schizophrenia group even after controlling for neurocognition and symptoms in a stepwise multiple regression. Results suggest that deficits in emotion recognition in schizophrenia may partly result from a combination of impairments in the ability to judge the cognitive and affective states of others and difficulties forming complex representations of self and others.