This study aimed to establish independent predictors for health-related quality of life (HRQoL) in people with psychotic disorders, and the mediating role of global functioning in those relationships. Data for 1642 people collected as part of the second Australian National Survey of Psychosis were analyzed. The Assessment of Quality of Life (AQoL)-4D and the Personal and Social Performance scale were used for assessing HRQoL and global functioning respectively. The study commenced with a theoretical model comprised of 26 sociodemographic and clinical variables. A predictive model for HRQoL was built up using a purposeful selection strategy to arrive at a set of clinically meaningful, independent predictors. The mediating effect of global functioning was then assessed. Seven variables were found to have an independent effect on HRQoL: perception of loneliness, number of negative symptoms, use of psychotropic and anticholinergic medications, course of disorder, lifetime histories of chronic pain and cardiovascular disease and living arrangements at the time of the interview. All variables except perceived loneliness and chronic pain were partially mediated through global functioning. This final model explained 46% of the variance in HRQoL, with loneliness and number of negative symptoms the strongest predictors. Evidence in support of a credible causal pathway for HRQoL in people with psychotic disorders, mediated by global functioning was presented. The importance of the quality of social relationships was highlighted, and potential targets for improving the HRQoL of this population identified.