OBJECTIVE: To provide the most up-to-date prevalence estimates of alcohol and illicit drug use among individuals with psychosis in Australia, and explore correlates associated with a lifetime diagnosis of both alcohol abuse/dependence and cannabis abuse/dependence. METHOD: This paper uses data from the Survey of High Impact Psychosis (SHIP), conducted as a follow-up to the first Australian National Low Prevalence (Psychotic) Disorders Study (1997-1998). The SHIP was a national study, carried out across five states, in which a sample of 1825 individuals was recruited through a two-phase sampling framework. RESULTS: Alcohol and illicit drug use was highly prevalent for the entire sample. There were few significant differences in the prevalence or frequency of use across the diagnostic categories examined. Substantial increases in substance abuse/dependence were noted since the 1997-1998 survey (51% diagnosed with alcohol abuse/dependence, 51% with cannabis abuse/dependence and 32% with other illicit drug abuse/dependence, compared to 28%, 23% and 12% respectively, in the 1997-1998 survey by Kavanagh et al., 2004). Factors significantly associated with both lifetime alcohol and cannabis dependence included male gender, younger age, single marital status, lower educational attainment, shorter duration of illness, lifetime presence of hallucinations, higher negative syndrome score and lower body mass index (BMI). A number of other factors were found to be differentially associated with either lifetime alcohol or cannabis dependence. CONCLUSIONS: The use of alcohol and illicit substances is common among people with a psychotic illness, with a concerning upward trend in rates of substance abuse/dependence since the 1997-1998 survey. Clinicians should be aware of the potential impact of concurrent substance use and provide integrated treatment for individuals presenting with psychotic illnesses. More research and investment in new intervention programs is required.