In this review, we describe neuropsychological and brain imaging findings in the early stages of psychosis and schizophrenia. We focus on recent clinical high-risk studies and consider whether the evidence supports these as 'endophenotypes' of a vulnerability to the illness or as 'biomarkers' of illness onset and transition. The findings suggest that there are a number of processes at psychosis onset that may represent biomarkers of incipient illness. These neurobiological indices particularly implicate the integrity of frontal and temporal cortices, which may or may not be related to the genetics of psychosis (i.e. potential 'endophenotypes'). However, these brain regions are dynamically changing during normal maturation, meaning that any putative neurobiological markers identified at the earliest stages of illness may be relatively unstable. We suggest that, while such measures may be readily identified as potential neurobiological markers of established illness, they are inconsistent at (or around) the time of illness onset when assessed cross-sectionally. Instead, identification of more valid risk markers may require longitudinal assessment to ascertain normal or abnormal trajectories of neurodevelopment. Accordingly, we assert that the current conceptualisations of potential biomarkers and/or 'endophenotypes' for schizophrenia may need to be reconsidered in the context of normal and abnormal brain maturational processes at the time of onset of psychotic disorders.