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The purpose of this study was to examine the predictive relationship between psychological stress and symptom change among individuals with a history of psychotic symptoms. The study had a number of specific aims. First and foremost, the study retrospectively examined the impact of stressful experience, operationalized based on conservation of resources (COR) theory, on mood and psychotic symptoms. COR theory is a general model of stress, and in past research has been applied primarily to normal populations; this was the first study of its kind to apply COR theory to a sample of seriously mentally ill participants. Second, the study attempted to replicate earlier findings regarding the role of negative affect as a mediator of the impact of stressful events on psychotic symptoms. Third, following COR theory, the study investigated the putative buffering effect of resource gains (i.e., positive life events) on the impact of resource losses.The participants in this study were 77 stable outpatients at a community mental health clinic who were diagnosed with either a schizophrenia-spectrum disorder or a bipolar disorder with psychotic features. Participants were assessed at two time points, separated in time by approximately 9 to 12 weeks. During the initial interview, diagnoses were established and baseline symptoms were assessed. During the terminal interview, symptoms were reassessed, and gains and losses in resources were retrospectively examined for the preceding six weeks. Results supported the hypothesis that cumulative resource losses are causally related to psychosis symptom exacerbations and increased levels of depression and anxiety. There was also evidence that the interaction of baseline social functioning with resource losses predicted symptom exacerbations, and that resource gains were associated with symptom improvements. Mixed support was found for other hypotheses. There was no evidence that changes in depression and anxiety mediated the associations between resource loss and psychosis symptoms, or that resource gains buffered the adverse effect of resource losses. Resource loss was positively associated with current depression and anxiety, while resource gain was negatively associated, but only when using self-reported changes that were inclusive of both dependent and independent events.