Objective: To determine whether first episode psychosis (FEP) patients who meet criteria for substance abuse have worse outcomes than FEP patients who do not abuse substances. Method: A systematic literature search was conducted using MEDLINE, PSYCHInfo, Cochrane controlled trial register, and other databases to find prospective studies comparing outcomes for FEP patients with and without substance abuse. Both schizophrenia spectrum and affective spectrum patients were included in the review. Outcomes included positive and negative symptoms, risk of relapse, re-hospitalization, treatment compliance and psychosocial variables. Results: Twelve studies met inclusion criteria. Compared to FEP patients without substance abuse, patients with substance abuse experienced increased positive symptoms in five out of seven studies; increased risk of relapse in two out of two studies; and increased risk of poor treatment compliance in three out of five studies. Only one of six studies examining negative symptoms found a significant association with substance abuse and only one out of eight studies found any associations between psychosocial outcomes and substance abuse. Conclusions: FEP patients with co-morbid substance abuse may experience increased risk of relapse, increased positive symptoms and poor compliance, but negative symptoms and psychosocial variables may not be affected.