Eighty-five schizophrenic patients were found to have worse two-year follow-up outcome (history of remission, clinical course, improvement in psychotic symptoms, general treatment result) than 39 non-schizophrenic psychotic patients. The outcome of 36 schizophrenic patients with derealization at initial evaluation, especially when nine hebephrenics were excluded, was better than that of 49 schizophrenic patients without derealization but similar to that of 39 non-schizophrenic patients. The hebephrenics with derealization demonstrated similar outcomes to schizophrenic patients without derealization. In non-schizophrenic patients, derealization had no prognostic significance.