It has become widely accepted that the psychotic disorders are endpoints of atypical developmental trajectories indexed by abnormal emotional and cognitive development early in life. However, the role of environmental factors in determining these trajectories has received relatively little attention. In this article, we argue that (1) the influence of environment on psychosis can best be understood if we focus on specific types of psychotic experiences such as hallucinations and delusions, (2) these symptoms are the products of specific cognitive biases and deficits, and (3) the development of these particular patterns of cognitive functioning is influenced by specific kinds of environmental adversity. This approach is at variance with more conventional approaches because it suggests that each type of experience, rather than being the manifestation of a common underlying illness process, is a product of a specific set of causal variables. Importantly, these variables include environmental determinants, although not to the exclusion of endogenous factors such as neurodevelopmental impairment or genetic vulnerability. We discuss the implications of this approach for neurobiological and genetic research into psychosis, as well as clinical practice.