The aim of the study was to investigate trajectories of social functioning in young people with first-episode psychosis (FEP) with and without cannabis misuse using a secondary analysis of data from the Episode-II trial. Forty-two young people with FEP and comorbid cannabis use disorder were compared with 39 young people with FEP but without a cannabis use disorder. Social functioning was assessed every 6 months during a 30-month follow-up. Multilevel linear growth curve modeling was used to compare the social functioning trajectories over time for those with and without cannabis misuse. Cannabis misuse was not associated with social functioning at baseline assessment. Over a 30-month follow-up, FEP patients without cannabis disorder showed significant improvements in their social functioning, whereas patients with cannabis misuse at baseline displayed no such improvement. Patients with and without cannabis misuse differed significantly in their levels of social functioning after 24 months. Similar results were obtained after adjusting for potential confounders (i.e., age, gender, negative symptoms, premorbid functioning, DSM-IV diagnoses, baseline social functioning and other substance use). In the context of a specialized early intervention service, patients with cannabis misuse at baseline did not attain the improvements in social outcomes observed in their counterparts without cannabis misuse. There is a need to develop effective interventions to reduce cannabis misuse to ultimately improve social outcomes in young people with psychosis.