Objective There is uncertainty regarding the onset timing of the cognitive deficiencies of schizophrenia. We investigated whether conversion to psychosis and/or olanzapine altered the neuropsychological course of subjects within the first-ever double blind medication study of the putative schizophrenia first episode prodrome. Method Sixty participants in a double blind trial of olanzapine as a treatment for putative prodromal states were assessed at entry (pre-randomization), and again at 6 and 12 months (if they remained non-psychotic), or at any of these points prior to psychosis followed by post-psychosis and 6 months post-psychosis assessments. Results Participants who converted to psychosis did not differ from placebo non-converters in pre-randomization global neuropsychological status. Early converters did not differ from later converters in entry neuropsychological status. Subjects who converted after 6 months did not show neuropsychological declines during the initial, pre-psychosis, 6 months. Neuropsychological course did not differ between converters to psychosis and non-converters, or between olanzapine and placebo-assigned subjects. Conclusions Neither the onset of frank psychosis nor olanzapine treatment of the prodrome significantly alters neuropsychological course in persons considered to be at high risk at their initial (pre-psychosis) assessment. These findings suggest that the neuropsychological deficiencies associated with psychotic conditions largely pre-exist the first frank psychotic episode.