A growing body of evidence demonstrates that persistent positive symptoms, particularly delusions, can be improved by cognitive behaviour therapy for psychosis. Heightened perception and processing of threat are believed to constitute the genesis of delusions. The present study aimed to examine functional brain changes following cognitive behaviour therapy for psychosis. The study involved 56 outpatients with one or more persistent positive distressing symptoms of schizophrenia. Twenty-eight patients receiving cognitive behaviour therapy for psychosis for 6-8 months in addition to their usual treatment were matched with 28 patients receiving treatment as usual. Patients' symptoms were assessed by a rater blind to treatment group, and they underwent functional magnetic resonance imaging during an affect processing task at baseline and end of treatment follow-up. The two groups were comparable at baseline in terms of clinical and demographic parameters and neural and behavioural responses to facial and control stimuli. The cognitive behaviour therapy for psychosis with treatment-as-usual group (22 subjects) showed significant clinical improvement compared with the treatment-as-usual group (16 subjects), which showed no change at follow-up. The cognitive behaviour therapy for psychosis with treatment-as-usual group, but not the treatment-as-usual group, showed decreased activation of the inferior frontal, insula, thalamus, putamen and occipital areas to fearful and angry expressions at treatment follow-up compared with baseline. Reduction of functional magnetic resonance imaging response during angry expressions correlated directly with symptom improvement. This study provides the first evidence that cognitive behaviour therapy for psychosis attenuates brain responses to threatening stimuli and suggests that cognitive behaviour therapy for psychosis may mediate symptom reduction by promoting processing of threats in a less distressing way.