Aim To evaluate the role of tobacco use in the development of psychosis in individuals at clinical high risk. Method The North American Prodrome Longitudinal Study is a 2‐year multi‐site prospective case control study of persons at clinical high risk that aims to better understand predictors and mechanisms for the development of psychosis. The cohort consisted of 764 clinical high risk and 279 healthy comparison subjects. Clinical assessments included tobacco and substance use and several risk factors associated with smoking in general population studies. Results Clinical high risk subjects were more likely to smoke cigarettes than unaffected subjects (light smoking odds ratio [OR] = 3.0, 95% confidence interval [CI] = 1.9‐5; heavy smoking OR = 4.8, 95% CI = 1.7‐13.7). In both groups, smoking was associated with mood, substance use, stress and perceived discrimination and in clinical high risk subjects with childhood emotional neglect and adaption to school. Clinical high risk subjects reported higher rates of several factors previously associated with smoking, including substance use, anxiety, trauma and perceived discrimination. After controlling for these potential factors, the relationship between clinical high risk state and smoking was no longer significant (light smoking OR = 0.9, 95% CI = 0.4‐2.2; heavy smoking OR = 0.3, 95% CI = 0.05‐2.3). Moreover, baseline smoking status (hazard ratio [HR] = 1.16, 95% CI = 0.82‐1.65) and categorization as ever smoked (HR = 1.3, 95% CI = 0.8‐2.1) did not predict time to conversion. Conclusion Persons at high risk for psychosis are more likely to smoke and have more factors associated with smoking than controls. Smoking status in clinical high risk subjects does not predict conversion. These findings do not support a causal relationship between smoking and psychosis.