Most individuals with schizophrenia retrospectively report a prodromal period characterized by increasing problems in thinking, feeling, and behaving. However, it is less clear how many individuals who display prodromal symptoms will subsequently develop a psychotic illness. Thus, a precondition for early intervention in psychosis is the accurate detection of those who may be at true risk of developing a psychotic illness. The aim of this article is to review current work addressing prediction and prevention in the prodrome to psychosis. First, we describe research efforts to develop and test operational criteria for prospectively assessing psychosis liability over time. Second, the clinical, functional, and biological features of the prodrome are presented, along with a discussion of the variables most frequently associated with psychosis onset. Next, treatment studies are reviewed. The review concludes with a framework for future early identification and treatment studies.