Recent advances in knowledge about cannabinoid receptor function have renewed interest in the association between cannabis and psychosis. Case series, autobiographical accounts, and surveys of cannabis users in the general population suggest an association between cannabis and psychosis. Cross-sectional studies document an association between cannabis use and psychotic symptoms, and longitudinal studies suggest that early exposure to cannabis confers a close to two-fold increase in the risk of developing schizophrenia. Pharmacological studies show that cannabinoids can induce a full range of transient positive, negative, and cognitive symptoms in healthy individuals that are similar to those seen in schizophrenia. There is considerable evidence that in individuals with an established psychotic disorder such as schizophrenia, exposure to cannabis can exacerbate symptoms, trigger relapse, and worsen the course of the illness. Only a very small proportion of the general population exposed to cannabis develop a psychotic illness. It is likely that cannabis exposure is a 'component cause' that interacts with other factors to 'cause' schizophrenia or other psychotic disorder, but is neither necessary nor sufficient to do so alone. Further work is necessary to identify the factors that underlie individual vulnerability to cannabinoid-related psychosis and to elucidate the biological mechanisms underlying this risk.