The early intervention movement for treatment of schizophrenia and other psychotic disorders has extended to include pharmacological and psychological treatment of putatively prodromal (or ‘ultra-high risk’) patients. The psychotherapy that has been trialed to date is cognitive-behaviour therapy (CBT), due to its apparent success with patients with established psychotic disorder and its current popularity as a therapeutic modality. This paper presents phenomenological models of psychotic, particularly schizophrenic, vulnerability, which emphasise a disturbed basic sense of self <i>(ipseity)</i> and intersubjectivity. We argue that these phenomenological models indicate that CBT may not be the most suitable therapy for prodromal patients, and may even be counterproductive. A central element of this argument is that CBT’s emphasis on cognitive reflection and challenging may encourage a core pathological process in these patients (hyper-reflexive awareness). The paper explores alternatives for psychotherapy that emerge from phenomenological accounts of psychosis, while recognising the paradoxical aspects of psychotherapy with these patients. These alternatives include strategies that provide an intersubjective space where patients can evolve a more robust pre-reflective self-awareness (first-person perspective), second-person perspective and experience of trustworthy relationships when encountering others, empathic attunement afforded by the phenomenological approach’s sensitivity to psychotic <i>experience</i>, and strategies that encourage a form of immersion or absorption in present activity, including mindfulness and creative ‘flow’. We also suggest the possible value of combining therapeutic modalities (even ones that may seem contradictory) and of the need to empirically test therapeutic strategies other than CBT in the ultra-high risk population.