The outcome of first episode psychosis (FEP) is highly variable and difficult to predict. We studied prospectively the impact of poor insight and neuropsychological deficits on outcomes in a longitudinal cohort of 127 FEP patients. Participants were assessed on 5 domains of cognitive function and 2 domains of insight (clinical and cognitive). At 12months, patients were assessed again for symptom severity and psychosocial function. Regression analyses revealed that cognitive insight (a measure of self-reflectiveness and self-certainty) was the best baseline predictor of overall psychopathology at 12months whereas executive function performance at admission to the study indicated later severity of negative symptoms. Other neuropsychological and insight measures were poor predictors of psychosocial function at 1year. The results suggest that specific neuropsychological and insight factors have separate predictive capacities indicating that they are distinct psychological processes in psychosis. Cognitive insight proved to be a useful prognostic indicator, and should be considered for future studies and as a potential focus for treatment.