Studies investigating the impact of comorbid substance use disorders (SUD) in psychosis have tended to focus on cross-sectional data, with few studies examining the effects of substance use course on clinical outcome. The main aim of the present study was to assess the impact of baseline SUD and course of SUD on remission of positive symptoms. The Early Psychosis Prevention and Intervention Centre admitted 786 first-episode psychosis (FEP) patients between 1998 and 2000. Data on SUD and clinical outcome were collected from patients' medical records (MR) of 643 patients who met inclusion criteria. Lifetime prevalence of SUD was 74%, with 62% having a SUD at baseline. This reduced to 36% in those patients who completed 18 months of treatment at the EPPIC program. A Cox regression analysis indicated that a decrease or cessation of substance use significantly increased the probability of remission, whilst persistent SUD substantially reduced the likelihood. In addition, patients who reduced use appeared to have better outcomes at 18 months than those patients who had never used substances. Baseline SUD was not found to have any significant influence on symptom remission. Patients presenting with FEP have high rates of SUD. Effective management of psychosis within a specialized service is associated with reductions in SUD over the course of treatment, although persistent substance use is associated with non-compliance, treatment drop-out and poor remission rates. As such, young people with FEP and comorbid substance use should be offered integrated treatment that addresses both disorders