The Palau Early Psychosis Study (PEPS) was designed to examine the pathogenesis of early psychosis in a high-risk population isolate. This paper describes the characteristics of our community-based, non-help seeking sample of 404 Palauan adolescents and quantifies the presence of early psychosis by level of genetic risk. The sample included 53 offspring of a schizophrenic parent designated as “Genetically Highest Risk” (GHR+) and 68 nieces/nephews of sib-pairs/trios, designated as “Genetically High Risk” (GHR). The remaining subjects were recruited through a high school survey that identified 62 “Genetically Moderate Risk” (GMR) adolescents with an affected second or third degree relative and 221 “Genetically Low Risk” (GLR) subjects with no close affected relatives. The GLR adolescents included 117 symptomatic or “Clinically High Risk” (CHR) adolescents and 104 asymptomatic normal controls. Based on a modified K-SADS-PL assessment, we identified 221 adolescents with early psychosis, 62 or 28% of whom had already transitioned to a psychotic disorder. Together, the two highest risk groups contributed 31% of the adolescent-onset psychosis cases and 27% of the prodromals. More than half of the early psychosis cases (53%) were GLR adolescents. The mean age of onset for DSM-IV psychosis was 12.9 years, and males transitioned at an earlier age than females. Our results indicate that Palauan adolescents, even GLR adolescents with no close affected relatives, have elevated rates of early psychosis. These young subjects can contribute valuable information about the familial transmission of schizophrenia, the developmental course of the illness, and rates of transition to frank psychosis. © 2006 Wiley-Liss, Inc.