In schizophrenia, social cognition is a strong predictor of functional outcome, and researchers have developed a range of interventions with the aim of improving functional outcome by way of improved social cognition. This article summarizes the literature on social cognitive dysfunction and social cognitive treatment approaches in first episode psychosis (FEP). Although the literature in FEP is relatively small, findings parallel those in chronic schizophrenia. Specifically, FEP individuals exhibit social cognitive dysfunction across a range of subdomains, this dysfunction is relatively stable over time, predicts social functioning, and mediates the relationship between neurocognition and social functioning. As in chronic schizophrenia, psychosocial interventions targeting social cognition in FEP appear to be feasible and acceptable to patients. These interventions show promising initial indicators that they may improve both social cognition and social functioning in FEP. Although several interventions have been designed or adapted to meet the age- and phase-specific needs of FEP individuals, there is no data as yet to assess whether these interventions are more acceptable to FEP patients than traditional social cognitive interventions. Computer-assisted treatments for social cognition are being tested in FEP. More research is needed to determine whether the potential benefits of computer approaches in terms of patient engagement and skill rehearsal outweigh the disadvantage of these interventions not involving actual social interaction.