Mood disturbances seen in first-episode mania (FEM) are linked to disturbed functional connectivity of the striatum. Lithium and quetiapine are effective treatments for mania but their neurobiological effects remain largely unknown. We conducted a single-blinded randomized controlled maintenance trial in 61 FEM patients and 30 healthy controls. Patients were stabilized for a minimum of 2 weeks on lithium plus quetiapine then randomly assigned to either lithium (serum level 0.6 mmol/L) or quetiapine (dosed up to 800 mg/day) treatment for 12 months. Resting-state fMRI was acquired at baseline, 3 months (patient only) and 12 months. The effects of treatment group, time and their interaction, on striatal functional connectivity were assessed using voxel-wise general linear modelling. At baseline, FEM patients showed reduced connectivity in the dorsal (p = 0.05) and caudal (p = 0.008) cortico-striatal systems when compared to healthy controls at baseline. FEM patients also showed increased connectivity in a circuit linking the ventral striatum with the medial orbitofrontal cortex, cerebellum and thalamus (p = 0.02). Longitudinally, we found a significant interaction between time and treatment group, such that lithium was more rapid, compared to quetiapine, in normalizing abnormally increased functional connectivity, as assessed at 3-month and 12-month follow-ups. The results suggest that FEM is associated with reduced connectivity in dorsal and caudal corticostriatal systems, as well as increased functional connectivity of ventral striatal systems. Lithium appears to act more rapidly than quetiapine in normalizing hyperconnectivity of the ventral striatum with the cerebellum. The study was registered on the Australian and New Zealand Clinical Trials Registry (ACTRN12607000639426). http://www.anzctr.org.au.