The stress associated with managing a first episode of schizophrenia and the secondary psychological sequelae may predispose young people to the phenomenon of illness engulfment, whereby personal identity is lost and replaced with a sense of self defined entirely by the illness. The overall objective of this pilot project was to provide an initial evaluation of the impact of a novel group intervention targeting improvement of self-concept (engulfment) and overall quality of life for young adults recovering from a first episode of schizophrenia. Fifty-two young adults diagnosed with a DSM-IV schizophrenia spectrum disorder were sequentially assigned to either a 12-week group intervention that provided members with opportunities to attain healthy self-concepts or a control group that received high quality treatment as usual. The two groups were compared on pretreatment, post-treatment, and 3-month post-treatment measures of engulfment, quality of life, and psychiatric symptoms. Allowing for dropouts, 26 subjects remained in the treatment group and 14 subjects in the control group after the 3-month follow-up. Participants in the treatment group demonstrated significant improvement in engulfment, quality of life (intrapsychic subscale) and symptoms, while the comparison group did not change. These preliminary results provide support for the benefits of a group intervention designed to enhance self-concept and to minimize the engulfing effects of illness.