Neurocognitive deficits are severe in first-episode psychosis. Patients ( N = 263) with first-episode psychosis (schizophrenia, schizoaffective, or schizophreniform disorders) were randomly assigned to double-blind treatment with olanzapine (mean 11.30 mg/day) or haloperidol (mean 4.87 mg/day) for 104 weeks. A neurocognitive battery was administered at baseline ( n = 246) and 12 ( n = 167), 24 ( n = 126), 52 ( n = 89), and 104 ( n = 46) weeks during treatment. Weighted principal component and unweighted composite scores were derived from individual tests. Both treatment groups demonstrated significant improvement on both composite scores. On the basis of the weighted composite score, olanzapine had greater improvement than haloperidol only at 12 ( p = .014) and 24 ( p = .029) weeks. For the unweighted composite, olanzapine had significantly better improvement compared with haloperidol only at week 12 ( p = .044). At week 12 only, olanzapine improved performance on the Digit Symbol and Continuous Performance Test significantly more than haloperidol. Both antipsychotic agents appeared to improve neurocognitive functioning among first-episode psychosis patients with schizophrenia. A significantly greater benefit in terms of neurocognitive improvement was found with olanzapine than with haloperidol at weeks 12 and 24.