Onset of psychosis may be associated with abnormal adolescent neurodevelopment. Here we examined the neurocognitive profile of first-episode, adolescent onset psychosis (AOP) as compared to typically developing adolescents, and asked whether neurocognitive performance varied differentially as a function of age in the cases compared with controls. A comprehensive neuropsychological battery was administered to 35 patients experiencing a first-episode of a DSM-IV psychotic disorder and to 31 matched controls. Clinicians also rated subjects’ social and role functioning, both at the time of neuropsychological assessment and 1 year later. Although patients displayed a wide range of impairments relative to controls, their most pronounced deficits included verbal memory, sensorimotor dexterity and cognitive processing speed. Among these, only processing speed showed a significant group-by-age interaction, consistent with an aberrant developmental course among AOP patients. Processing speed also accounted for substantial variance in other areas of deficit, and predicted social functioning 1 year later. AOP patients fail to show normal age-related increases in processing speed, which in turn predicts poorer functional outcomes. This pattern is consistent with the view that adolescent brain developmental processes, such as myelination, may be disrupted in these patients.