Innate immunity has been linked to initiation of Alzheimer's disease and multiple sclerosis. Moreover, risk of first-episode psychosis (FEP) and schizophrenia (Sz) is increased after various infections in predisposed individuals. Thus, we hypothesized an analogous role of innate immunity with increased C-reactive protein (CRP) in non-affective psychosis. Differential blood count, CRP, neutrophil and monocyte-macrophage activation markers, cortisol and psychotic symptoms (Positive and Negative Syndrome Scale [PANSS]) were assessed in controls (n = 294) and acutely ill unmedicated FEP (n = 129) and Sz (n = 124) patients at baseline and after 6 weeks treatment. Neutrophils, monocytes, and CRP were increased in patients vs controls at baseline (P < .001), and neutrophil and monocyte counts correlated positively with activation markers. Eosinophils were lower at baseline in FEP (P < .001) and Sz (P = .021) vs controls. Differences in neutrophils (P = .023), eosinophils (P < .001), and CRP (P < .001) were also present when controlling for smoking and cortisol, and partially remitted after antipsychotic treatment. FEP patients with high neutrophils (P = .048) or monocytes (P = .021) had higher PANSS-P scores at baseline but similar disease course. CRP correlated with PANSS-P at baseline (ρ = 0.204, P = .012). Improvement of positive symptoms after treatment correlated with declining neutrophils (ρ = 0.186, P = .015) or CRP (ρ = 0.237, P = .002) and rising eosinophils (ρ = -0.161, P = .036). In FEP, normalization of neutrophils (ρ = -0.231, P = .029) and eosinophils (ρ = 0.209, P = .048) correlated with drug dosage. In conclusion, innate immune system activation correlated with PANSS-P, supporting the immune hypothesis of psychosis. Neutrophil and monocyte counts and CRP levels may be useful markers of disease acuity, severity, and treatment response.