Objective: Most studies have investigated either the singular or relative contributions of premorbid adjustment, verbal memory and symptom remission to functional outcomes in first-episode psychosis. Fewer studies have examined the pathways of these factors in impacting functioning. Our study addresses this gap. The objective was to determine whether the relationship between premorbid adjustment and functional outcomes was mediated by verbal memory and symptom remission. Method: A total of 334 first-episode psychosis participants (aged 14–35 years) were assessed on premorbid adjustment, verbal memory upon entry, and positive and negative symptom remission and functioning at multiple time points over a 2-year follow-up. Results: Mediation analyses showed that over the first year, the relationship between premorbid adjustment and functioning was mediated by verbal memory and positive symptom remission (β = –0.18; 95% confidence interval = –0.51, –0.04), as well as by verbal memory and negative symptom remission (β = –0.41; 95% confidence interval = –1.11, –1.03). Over 2 years, the relationship between premorbid adjustment and functioning was mediated by verbal memory and only negative symptom remission (β = –0.38; 95% confidence interval = –1.46, –0.02). Conclusion: Comparatively less malleable factors (premorbid adjustment and verbal memory) may contribute to functional outcomes through more malleable factors (symptoms). Promoting remission may be an important parsimonious means to achieving better functional outcomes.