Schizophrenics were compared with neurotic controls on four tests of categorical thinking in an attempt to discover the nature of overinclusive thinking. The tests provided both verbal and nonverbal measures of conceptual loosening, the proportion of out-of-category items, distortion of the internal structure of a category and any tendency towards overcategorization. The results showed that schizophrenics were relatively worse on nonverbal than on verbal categories with, in particular, a greater degree of conceptual loosening and a tendency towards overcategorization. The most striking abnormality emerged during observation of the actual sorting strategy itself. Schizophrenics tackled the task in a way which suggests that they lack the ability to form a Gestalt of the task.