Studies commonly report poor performance in psychotic patients compared with controls on tasks testing a range of cognitive functions, but, because current IQ is often not matched between these groups, it is difficult to determine whether this represents a generalized deficit or specific abnormalities. Fifty-three first-episode psychosis patients and 53 healthy controls, one-to-one matched for sex, age, and full-scale current IQ, were compared on Wechsler Adult Intelligence Scale (WAIS) subtests representing indices of perceptual organization, verbal comprehension, processing speed, and working memory as well as other tests of executive function and episodic memory. The groups showed an equivalent pattern of performance on all WAIS subtests except digit symbol processing speed, on which the patients were significantly worse. Patients were also worse on measures where performance correlated with digit symbol score, namely working and verbal memory tasks. Standardized residual scores for each subtest were calculated for each patient using the difference between their actual subtest score and a predicted subtest score based on their full-scale IQ and the performance of controls. Scaled scores and residual scores were examined for relationships with clinical measures. Digit symbol–scaled score was significantly correlated with concurrent negative syndrome score at baseline, and digit symbol residual score significantly predicted residual negative symptoms at 1-year follow-up. In summary, our comparison of patients and controls precisely matched for IQ revealed that processing speed was attenuated in recent-onset schizophrenia, contributed significantly to working and episodic memory deficits, and was a prognostic factor for poor outcome at 1 year.