This study examines the mechanisms of recovery from psychosis. Specifically, the study aims to evaluate the putative impact of enhancing cognitive coping strategies via Cognitive-Behavior Therapy for psychosis (CBTp) on subjective stress, autonomic regulation (physiological arousal), and psychotic symptoms in individuals with schizophrenia and related disorders. As part of the study, participants will be randomized to receive up to 26 weekly sessions of CBTp (over 30 weeks) or "treatment as usual". Research evaluations will completed at baseline, and after 10, 20 and 30 weeks. The study outcome measures include psychotic symptoms as measured by clinical interviews, along with ambulatory measures of autonomic regulation and self-reports of psychotic experiences during daily functioning using mobile devices (i.e., Palm computers).