Studying neuroleptic-naive first episode schizophrenia is a strategy for investigating clinical and neuropsychological abnormalities at a very early phase of the disease without confounding influences of illness duration and medication effects. We examined the clinical and neuropsychological time course over 2 years in 32 neuroleptic-naive first episode patients (20 males, 12 females) and 21 healthy individuals with similar sociodemographic characteristics. Early treatment-induced reduction of negative symptoms predicted superior cognitive performance throughout followup in the domains of verbal fluency, attention, and non-verbal learning and memory. There were no associations between psychotic or disorganized symptoms and cognitive variables. These findings suggest an important relationship between treatment efficacy of antipsychotic medication and the longer term course of cognitive deficits in schizophrenia.