He played an important role in Fulham reaching the Europa League final in 2010, but Schwarzer lost his second European final with a narrow defeat to Atlético Madrid.
Following his performances during the 2009–10 season, Arsenal manager Arsène Wenger attempted to sign Schwarzer. It was reported that a bid of around £2 million in May 2010 had been made for Schwarzer and a second bid of around the same value had been made in August 2010; however both were rejected by Fulham.
On 13 August 2010, Fulham manager Mark Hughes revealed that Schwarzer had handed in a transfer request, which Hughes had rejected. On 31 August 2010, it was reported that Arsenal had made a last-ditch bid of around £4 million to bring Schwarzer to the Emirates Stadium before the transfer window closed, however Hughes denied that any approach was made.
Schwarzer saved an 89th-minute Shao Jiayi penalty against China in Australia's 0–0 draw in the 2010 World Cup qualifier in March 2008, continuing his record of stopping penalty kicks. He received his second yellow card of the campaign against Qatar in Doha, in which Australia were 3–1 winners, leading to him being suspended for the following match against China.
He was the country's first-choice keeper for all three matches of the group stage in the 2010 World Cup in a group composed of Australia, Germany, Ghana and Serbia. In the first match, Australia were crushed 4–0 by the Germans, but they recovered with a 1–1 draw against Ghana in the next game. In the final match, Australia beat Serbia 2–1, thus finishing third in the group with four points, just missing out on qualification to the round of 16 on goal difference with Ghana.