The intense clinical and research interest in early psychosis in recent years has highlighted a range of ethical issues which need to be considered carefully. Our perspective is based on 16 years of clinical and research experience with young people at this phase of illness as well as the research contributions of many others. We discuss the ethical dilemmas in relation to the three key foci, which make up the early psychosis paradigm. These are the pre-psychotic or prodromal phase, the period of untreated psychosis and the first psychotic episode and the critical period of recovery, which follows this. Most attention is devoted to the pre-psychotic period, however ethical considerations related to research in the other two clinical foci are briefly covered as well. Our contention is that the ethical issues are essentially identical to those arising in early intervention research in mainstream medicine. This has been concealed by inconsistency and emotion, which has great potential to confuse, politicize and derail rational debate. The legacy of the isolation of psychiatry from medicine and consequent prejudice and stigma in the professional as well as the public mind seems to be fueling a tendency in some societies to view psychiatric research as qualitatively different from other medical research. Sound clinical research data should be allowed to illuminate the options for potential consumers across all phases of illness. The alternative is research paralysis, which would force clinical practice to expand blindly without an evidence base.