Cannabis use may increase the risk of psychotic disorders and result in a poor prognosis for those with an established vulnerability to psychosis. A 3-year follow-up (1997-1999) is reported of a general population of 4,045 psychosis-free persons and of 59 subjects in the Netherlands with a baseline diagnosis of psychotic disorder. Substance use was assessed at baseline, 1-year follow-up, and 3-year follow-up. Baseline cannabis use predicted the presence at follow-up of any level of psychotic symptoms (adjusted odds ratio (OR) = 2.76, 95% confidence interval (CI): 1.18, 6.47), as well as a severe level of psychotic symptoms (OR = 24.17, 95% CI: 5.44, 107.46), and clinician assessment of the need for care for psychotic symptoms (OR = 12.01, 95% CI: 2.24, 64.34). The effect of baseline cannabis use was stronger than the effect at 1-year and 3-year follow-up, and more than 50% of the psychosis diagnoses could be attributed to cannabis use. On the additive scale, the effect of cannabis use was much stronger in those with a baseline diagnosis of psychotic disorder (risk difference, 54.7%) than in those without (risk difference, 2.2%; p for interaction = 0.001). Results confirm previous suggestions that cannabis use increases the risk of both the incidence of psychosis in psychosis-free persons and a poor prognosis for those with an established vulnerability to psychotic disorder.