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Background. Cognitive impairment is considered to be a core characteristic of schizophrenia. The relationship between psychosis and cognitive deterioration, however, remains unclear. This longitudinal study investigated the neuropsychological functioning of patients before and after their first psychotic episode. Cognitive functioning of participants who later developed a psychosis was compared to that of people at ultra-high risk (UHR) for psychosis who did not develop psychosis at follow-up and healthy controls. Method. Participants were 41 persons at UHR for psychosis (the UHR group), of whom 17 developed psychosis between the first and second assessment. Seventeen healthy controls were included in the study. Cognitive performance was assessed at intake (T0) and again after 18 months (T1). The areas of cognitive functioning assessed include verbal memory and learning, visuospatial working memory, executive function, sustained attention and motor speed. Results. The transition group did not perform significantly worse at the second assessment than at the first on any of the outcome measures. The UHR group performed better on a verbal learning and memory test at T1 compared to T0. At T0, the control group scored significantly better than the UHR group and the transition group on the verbal learning and memory test and the verbal fluency test. Conclusions. The results indicate that no cognitive deterioration occurs during the first psychotic episode. Problems in verbal memory may be present before the first episode of psychosis. [ABSTRACT FROM AUTHOR]