Background The neurotoxic hypothesis suggests that psychosis is toxic to the brain leading to clinical consequences. In this study, we hypothesized that a longer duration of untreated psychosis (DUP) in first episode schizophrenia (FES) patients is associated with poorer cognitive functioning, and that higher premorbid intelligence buffers against DUP-related cognitive impairment. Method Eighty-one FES patients completed a neuropsychological battery, the Brief Assessment of Cognition in Schizophrenia (BACS). Composite scores of the BACS, which were normalized to a matched healthy control of seventy-three subjects, were used as an index of general cognition. A median split using the Wide Range Achievement Test–Reading Test scores was used to divide the patients into low versus high premorbid IQ groups. Hierarchical linear regression was performed to examine predictors of general cognition, including DUP. Results Longer DUP was found to be a significant predictor of poorer general cognition. In addition, DUP predicted general cognition in the low premorbid IQ group but not in the high premorbid IQ group. Conclusions Our findings demonstrate that longer DUP in FES patients is associated with worse cognitive scores, and that this association is more pronounced in a subgroup of patients who have lower premorbid intelligence. Our results suggest the importance of earlier identification and management of patients with low premorbid IQ, given that their cognition may be more vulnerable to the toxicity of psychosis.