Cognitive behavior therapies (CBT) show promise in promoting symptom management and social skills with adults suffering from psychosis and in reducing the risk of progression from high risk to first-episode psychosis. The cognitive components of CBT for psychosis tend to be conceptualized as restructuring dysphoric, anxiogenic, delusional, or hallucinatory thoughts in order to enhance reality testing. The behavioral components of CBT for psychosis tend to focus on social skills training in order to reduce negative symptoms. A review of relevant research on neurobiology and information processing in psychosis is provided in order to identify strategies for maximizing the effectiveness of CBT for psychotic disorders. It is suggested that greater attention be given to teaching and providing in vivo guided and supported experiences that enhance cognitive processing involving (a) screening out irrelevant information and accurately identifying sources of perceptions or thoughts with appropriate self-awareness (e.g., hallucinations); (b) recognizing and developing strategies for responding to relevant contextual information and detecting and correcting perceptual, cognitive, or response errors (e.g., disorganized thoughts or behavior); and (c) emotion processing, social engagement, and channeling motivation in self-directed behavior (e.g., flat affect, avolition). Empirical evidence of a need for CBT to address co-occurring posttraumatic stress disorder when treating psychotic disorders also is noted.