Other measures include warnings at the top of Google search for more than 13,000 queries to make it clear that child abuse is illegal.
Schmidt acknowledged that no algorithm is perfect and Google cannot prevent pedophiles adding new images to the web.
Campaigners welcomed the move but doubted how much impact the changes would bring. Pedophiles tend to share images away from public search engines, they say.
"They don't go on to Google to search for images," said Jim Gamble, the former chief of Britain's Child Exploitation and Online Protection Center. "They go on to the dark corners of the Internet on peer-to-peer websites."
British Prime Minister David Cameron agreed there is more to be done, and said the next step was to go after the "dark net," where people secretly share images away from the public search engines.
His government announced on Monday that its National Crime Agency is joining forces with the FBI to target pedophiles who use encrypted networks online.