Although the underlying neurobiology of emerging psychotic disorders is not well understood, evidence from structural imaging and other studies support the notion that schizophrenia arises as a consequence of both an 'early neurodevelopmental' disturbance, as well as 'late neurodevelopmental' changes occurring during the initial stages of a psychotic illness, including around the time of transition to illness. In line with this, our longitudinal MRI findings in individuals at ultra-high risk for developing a psychotic illness show that there are excessive neuroanatomical changes in those who convert to psychosis. These aberrant changes are observed most prominently in medial temporal and prefrontal lobe regions. In a further series of longitudinal studies in first-episode psychosis, we have identified changes in prefrontal regions that indicate an accelerated loss of grey matter in patients compared to healthy control subjects. We suggest that the available evidence is consistent with the presence of subtle regionally and temporally specific neurobiological changes through the course of psychosis (Pantelis et al., 2005), including: (1) evidence for early (pre- and peri-natal) neurodevelopmental anomalies, (2) evidence for progressive grey matter loss involving medial temporal and orbital prefrontal regions around the time of transition to illness, and (3) evidence of late (post-pubertal) neurodevelopmental changes soon after the onset of psychosis, involving an acceleration of normal brain maturational processes, associated with significant loss of grey matter in dorsal prefrontal regions. The pathological processes underlying such changes remain unclear and may reflect anomalies in genetic and/or other endogenous mechanisms responsible for brain maturation, the adverse effects of intense or prolonged stress, or other environmental factors. These findings suggest that early markers of impending illness may prove difficult to define, and that brain changes in psychosis may better be conceptualized as anomalous trajectories of brain development. Further, active changes during transition to illness may present the potential to intervene and ameliorate these changes with potential benefit clinically.