BACKGROUND: Advances in the ability to identify people at high risk of developing psychosis have generated interest in the possibility of preventing psychosis. AIMS: To evaluate the efficacy of cognitive therapy for the prevention of transition to psychosis. METHOD: A randomised controlled trial compared cognitive therapy with treatment as usual in 58 patients at ultra-high risk of developing a first episode of psychosis. Therapy was provided over 6 months, and all patients were monitored on a monthly basis for 12 months. RESULTS: Logistic regression demonstrated that cognitive therapy significantly reduced the likelihood of making progression to psychosis as defined on the Positive and Negative Syndrome Scale over 12 months. In addition, it significantly reduced the likelihood of being prescribed antipsychotic medication and of meeting criteria for a DSM-IV diagnosis of a psychotic disorder. Analysis of covariance showed that the intervention also significantly improved positive symptoms of psychosis in this population over the 12-month period CONCLUSIONS: Cognitive therapy appears to be an acceptable and efficacious intervention for people at high risk of developing psychosis.