The psychosis prodrome, or period of clinical and functional decline leading up to acute psychosis, offers a unique opportunity for identifying mechanisms of psychosis onset and testing early intervention strategies. We summarize major findings and emerging directions in prodromal research and provide recommendations for clinicians working with individuals suspected to be at high risk for psychosis. The past two decades of research have led to three major advances. First, tools and criteria have been developed that can reliably identify imminent risk for a psychotic disorder. Second, longitudinal clinical and psychobiological data from large multisite studies are strengthening individual risk assessment and offering insights into potential mechanisms of illness onset. Third, psychosocial and pharmacological interventions are demonstrating promise for delaying or preventing the onset of psychosis in help-seeking, high-risk individuals. The dynamic psychobiological processes implicated in both risk and onset of psychosis, including altered gene expression, cognitive dysfunction, inflammation, gray and white matter brain changes, and vulnerability-stress interactions suggest a wide range of potential treatment targets and strategies. The expansion of resources devoted to early intervention and prodromal research worldwide raises hope for investigating them. Future directions include identifying psychosis-specific risk and resilience factors in children, adolescents, and non-help-seeking community samples, improving study designs to test hypothesized mechanisms of change, and intervening with strategies that better engage youth, their environmental contexts, and neurodevelopmental targets to improve functional outcomes. Prospective research on putatively prodromal samples has the potential to substantially reshape our understanding of mental illness and our efforts to combat it.