An index theory for projective families of elliptic pseudodifferential operators is developed when the twisting, i.e. Dixmier-Douady, class is decomposable. One of the features of this special case is that the corresponding Azumaya bundle can be real
ized in terms of smoothing operators. The topological and the analytic index of a projective family of elliptic operators both take values in the twisted K-theory of the parameterizing space. The main result is the equality of these two notions of index. The twisted Chern character of the index class is then computed by a variant of Chern-Weil theory.
