Internalized stigma refers to the process by which affected individuals endorse stereotypes about mental illness, expect social rejection, apply these stereotypes to themselves, and believe that they are devalued members of society (Corrigan et al., 2005; Corrigan et al., 2006; Ritsher & Phelan, 2004). Studies in clinical populations have found that internalized stigma is associated with a host of negative psychosocial variables, including decreased self-esteem and self-efficacy, hopelessness, demoralization, poor quality of life, and reduced motivation to work towards recovery goals (e.g., Livingston & Boyd, 2010; Ritsher, Otilingam, & Grajales, 2003). However, the relationship between internalized stigma and symptoms in schizophrenia is still unclear. Further, though evidence suggests that individuals with schizophrenia who are high in internalized stigma tend to actively avoid others, have reduced social contact, and maintain insular support networks (e.g., Yanos, Roe, Markus, & Lysaker, 2008), actual behavior and emotional responding during social interactions have not been explored. Thus, the current study examined 50 outpatients with schizophrenia or schizoaffective disorder on a battery of self-report measures, clinician-administered interviews, and a social affiliation interaction task to examine the associations between internalized stigma and symptoms, functioning, and emotional responding. Results showed that lower levels of Stigma Resistance were significantly correlated with greater deficits in clinician-rated experiential but not expressive negative symptoms. The present study replicated previous findings of a significant relationship between internalized stigma and other psychiatric symptoms, including depression. Using a multi-method approach to assess functioning, this study found that individuals with higher levels of internalized stigma and lower Stigma Resistance demonstrated impairments in communicative functional capacity and immediate social network relationships. Further, individuals lower in Stigma Resistance were rated as less affiliative and less overall socially skilled during a social affiliation interaction task. However, internalized stigma was not associated with positive or negative affect after the interaction controlling for affect before the task, and there were no differences in willingness to interact or reactions to partner. Importantly, these findings may ultimately contribute to the further development of psychosocial interventions that target internalized stigma.