Poor insight has a negative impact on the outcome in schizophrenia; consequently, poor insight is a logical target for treatment. However, neither medication nor psychosocial interventions have been demonstrated to improve poor insight. A method originally designed for diabetes patients to improve their illness management, Guided Self-Determination (GSD), has been adapted for use in patients with schizophrenia (GSD-SZ). The purpose of this study was to investigate the effect on insight of GSD-SZ as a supplement to treatment as usual (TAU) as compared to TAU alone in outpatients diagnosed with schizophrenia. The design was an open randomized trial. The primary hypothesis was cognitive insight would improve in those patients who received GSD-SZ + TAU as assessed by the BCIS. We additionally explored whether the intervention led to changes in clinical insight, self-perceived recovery, self-esteem, social functioning and symptom severity. Assessments were conducted at baseline, and at 3-, 6- and 12-month follow-up. Analysis was based on the principles of intention to treat and potential confounders were taken into account through applying a multivariate approach. A total of 101 participants were randomized to GSD-SZ + TAU (n = 50) or to TAU alone (n = 51). No statistically significant differences were found on the cognitive insight. However, at 12-month follow-up, clinical insight (measured by G12 from the Positive and Negative Syndrome Scale), symptom severity, and social functioning had statistically significantly improved in the intervention group as compared to the control group. “Improving insight in patients diagnosed with schizophrenia”, NCT01282307, http://clinicaltrials.gov/.