Both substance use and poor medication adherence are associated with poor outcome in psychosis. To clarify the contributions of substance use and poor medication adherence to poor outcome in the year following a first episode of psychosis, 205 patients were evaluated for use of tobacco, alcohol, cannabis and stimulants at their psychosis onset, and in a 1-year follow-up. Data on medication adherence and symptom remission were also collected. Patients had high rates of overall substance use before (37-65%) and after psychosis onset (45-66%). 44% showed poor medication adherence and 55% did not reach remission from psychosis. Nicotine dependence and cannabis use after psychosis onset significantly predicted both poor medication adherence and non-remission, and poor medication adherence mediated the effects of these substances on non-remission. In conclusion, medication adherence lies on the causal pathway between nicotine dependence and cannabis on the one hand and non-remission on the other.