There is currently a growing body of research examining environmental factors in the etiology of psychosis. Much recent interest has focused on the relationship between childhood trauma and the risk of developing psychotic experiences later in life. Numerous studies of psychiatric patients where the majority are diagnosed psychotic indicate that the prevalence of traumatic experiences in this group is high. This body of research now includes many large-scale population-based studies controlling for possible mediating variables, which together provide persuasive evidence of a dose-response association and are indicative of a causal relationship. Several psychological and biological models have been proposed which offer credible accounts of the processes by which trauma may increase risk of psychotic experience. Clinically it is imperative to routinely inquire about traumatic experiences, to respond appropriately and to offer psychosocial treatments to those who report traumatic life events in the context of psychotic experiences.