Cannabis has been used for recreational, medicinal and religious purposes in different cultures since ancient times. There have been various reports of adverse effects due to or associated with cannabis consumption, including psychotic episodes. Historically, our understanding of these clinical observations has been significantly hindered by a lack of knowledge regarding their underlying neurobiological and pharmacological processes. However, the discovery of the endogenous cannabinoid system has allowed a greater understanding of these adverse effects to develop. From a clinical perspective, toxic or transient psychotic reactions to the administration of herbal cannabis preparations or specific cannabinoid compounds have to be differentiated from longer-lasting, persistent schizophrenia-like disorders associated with the use of cannabis/cannabinoids. The latter are most likely to be associated with a predisposition or vulnerability to schizophrenia. Interestingly, the recently suggested role of the endogenous cannabinoid system in schizophrenia not related to previous cannabinoid consumption introduces an additional perspective on the mechanism underlying cannabis-associated schizophrenia-like disorders, as well as on the effects of cannabis consumption in schizophrenia. At present, acute psychopharmacological treatment options for cannabis-associated transient and persistent schizophrenia-like psychotic episodes are similar and are based on the use of benzodiazepines and antipsychotics. However, new pharmacological strategies using the endogenous cannabinoid system as a primary target are under development. Long-term psychotherapeutic treatment options involve case management strategies and are mainly based on specialised psychotherapeutic programmes to encourage cannabis users to stop their use of the drug.