Background: Neuropsychological impairment is common in schizophrenia and psychotic bipolar disorder. It has been hypothesized that the pathways leading to impairment differ between disorders. Cognitive impairment in schizophrenia is believed to result largely from atypical neurodevelopment, whereas bipolar disorder is increasingly conceptualized as a neuroprogressive disorder. The current investigation tested several key predictions of this hypothesis. Methods: Current neuropsychological functioning and estimated premorbid intellectual ability were assessed in healthy individuals (n=260) and a large, cross-sectional sample of individuals in the early and chronic stages of psychosis (n=410). We tested the following hypotheses: 1) cognitive impairment is more severe in schizophrenia in the early stage of psychosis; and 2) cognitive decline between early and chronic stages is relatively greater in psychotic bipolar disorder. Additionally, individuals with psychosis were classified as neuropsychologically normal, deteriorated, and compromised (i.e. below average intellectual functioning) to determine if the frequencies of neuropsychologically compromised and deteriorated patients were higher in schizophrenia and psychotic bipolar disorder, respectively. Results: Neuropsychological impairment in the early stage of psychosis was more severe in schizophrenia. Psychotic bipolar disorder was not associated with relatively greater cognitive decline between illness stages. The frequency of neuropsychologically compromised patients was higher in schizophrenia; however, substantial portions of both schizophrenia and psychotic bipolar disorder patients were classified as neuropsychologically compromised and deteriorated.

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