Diminished motivation is associated with robust impairment in psychosocial functioning in schizophrenia (SZ). Little is known about the reciprocal relationships between motivation and functioning, particularly following a first episode of psychosis. We tested bidirectional associations between motivation and social and occupational functioning in the year following a first episode of SZ spectrum disorder among patients in the Recovery After an Initial Schizophrenia Episode-Early Treatment Program (RAISE-ETP) study. Four hundred four individuals (aged 15-40) who presented with a first episode of SZ spectrum disorder (eg, SZ, schizoaffective or schizophreniform disorder, psychotic disorder not otherwise specified) completed assessments of work and school functioning, social functioning, and motivation at 6- and 12-month follow-up, controlling for assessments at study entry. Controlling for cognition, and psychotic and depressive symptoms measured at each time point, motivation at 6 months was associated with work and school participation at 12 months, but work and school participation at 6 months was not associated with motivation at 12 months. Conversely, social functioning at 6 months was associated with motivation at 12 months, but motivation at 6 months was not associated with social functioning at 12 months. Findings suggest that motivation is associated with later occupational, but not social, functioning in the first year following an initial episode of psychosis. Social functioning, on the other hand, is associated with later motivation. Future intervention trials focused on improving occupational functioning in this population may benefit from targeting patient motivation directly (eg, through motivational interviewing), or indirectly by improving relationships and support networks.