Adolescence and young adulthood mark the developmental period of highest risk for the onset of psychosis. The largely adolescent “psychosis-risk” population has therefore become the subject of much research interest, aimed at better defining who is at highest risk of worsening symptoms and function, as well as who may benefit from interventions during this important period. While it is clear that the current working definition of “ultra-high risk” (UHR) identifies a population for whom close monitoring is indicated, the actual treatment data are still evolving (and sometimes controversial). In this review, we begin with the premise that psychiatrists who work with adolescents and young adults may already be providing clinical services to these young people, possibly without the recognition of or focus on their UHR symptoms. Given this clinical reality, we then use the concept of “psychosis-proneness” to describe the historical evolution of how the field has conceptualized the transition from attenuated or brief states to full and persistent states. We describe how the robust literature investigating the impact of duration of untreated psychosis (DUP) on outcome has found that many cognitive and social deficits probably predate the onset of full psychotic syndromes such as schizophrenia, suggesting that a psychosis continuum or staging approach be applied to assessment and treatment planning in help-seeking adolescents and young adults exhibiting concerning changes in perception, belief structure or social communication. We then review the pharmacologic treatment studies that have been conducted in this population to date and propose a stepwise decision tree, using two vignettes to illustrate common clinical issues.