Since the seminal work of Brown and Birley, the potential link between life events and psychosis has been the focus of research and speculation. However, to date, there have been few studies of life events prior to the onset of psychosis; making it impossible to disentangle whether a higher prevalence is a cause or consequence of the disorder. Furthermore, studies have neglected important characteristics, such as severity and type, and rarely considered potential psychological mechanisms. The primary aims of this study were to extend the current literature by investigating the impact of life events and difficulties on the onset of psychosis, and investigate potential synergistic effects and mediating factors. Data on 253 first-presentation cases and 301 population-based controls were drawn from the Childhood Adversity and Psychosis study. Life events and difficulties experienced one year prior to onset (cases) or interview (controls) were assessed with the Life Events and Difficulties Schedule. Potential causal partners included negative schematic beliefs (assessed using the Brief Core Schema Scales) and potential mediators included symptoms of anxiety and depression (assessed using the Hamilton Anxiety and Depression Questionnaires). There was strong evidence that severe and intrusive experiences were particularly associated with psychosis, showing a three- to twelve-fold increase in odds. The impact of severe experiences was found to be cumulative. There was also tentative evidence that low social class and negative self-schemas combined synergistically with these experiences to increase the odds of psychosis. However, there was no evidence of mediation via affective symptoms. The one year period before the initial onset of psychosis is likely to be a time of serious psychosocial stress, potentially characterised by threatening and intrusive experiences. Research must continue to examine potentially modifiable mechanisms that may link such stressors and psychosis in order to improve our understanding and treatment of these disorders.