BACKGROUND: Patients with psychotic symptoms often respond poorly to treatment. Outcomes can be affected by biological, physiological and psychological factors according to the vulnerability-stress model. The patient's coping strategies and beliefs have been correlated with outcomes. OBJECTIVES: To investigate the knowledge and insight in relation to treatment response. METHODS: A naturalistic study was performed using patient interviews and information gathered from patient drug charts. Apart from the rating scales used for classification of treatment response (CANSEPT method), the SPKS knowledge of illness and drugs rating scale was utilized. RESULTS: In the group of patients in functional remission (FR; n = 38), 37% had insight into their illness as compared to 10% among those not in functional remission (non-FR; n = 78; P < 0.01). As much as 23% of the non-FR group had no strategy for responding to warning signs versus 8% in the FR group (P < 0.05). CONCLUSIONS: Better treatment outcomes appear to be associated with better insight into illness, higher knowledge of warning signs and better coping strategies.