This prospective study sought to determine the clinical impact of physical comorbidity on patients with first episode schizophrenia (FES) and we tested the hypothesis that patients with physical comorbidity were associated with poorer clinical and functional outcomes. The severity of psychopathology, insight, social/occupational functioning and quality of life were evaluated using Positive And Negative Syndrome Scale (PANSS), Scale to assess Unawareness of Mental Disorder, Global Assessment of Functioning Scale (GAF), and World Health Organisation Quality of Life-Bref Scale (WHOQOL-Bref) respectively at baseline and at 6, 12, 18 and 24 months. Out of 142 patients, physical comorbidity was present in 21.8% (n=31) of the patients, and they were mainly related to the cardiovascular, respiratory and endocrine systems. Compared to baseline measurements, patients with physical comorbidity had greater awareness into the consequences of their psychiatric illness at 12 months, the need for treatment at 12 and 18 months, and better improvement of PANSS total and general psychopathology subscale scores at 24 months. FES patients with physical comorbidity also had less reduction in their WHOQOL-Bref scores in the physical health domain at 12 and 18 months and greater increase in the GAF scores at 18 and 24 months, indicating better subjective rating of quality of life and objective measure of their global functioning prospectively. Clinicians need to be aware of the substantial rates of physical comorbidity in FES patients which may not be necessarily associated with worse longitudinal outcomes and the findings should encourage even greater efforts at early identification and management of these physical conditions.