Schizophrenia (SCZ) is a prevalent cause of disability worldwide. Distinguished mainly by psychosis, behavioral alterations could range from hallucinations to delusions. This systematic review examines evidence of a relationship between childhood trauma/adverse life events and psychosis, especially in SCZ. A methodical search provided reproducible results using these five databases: PubMed, ScienceDirect, Semantic Scholar, JSTOR, and Cochrane Library. The systematic search focused on articles published between July 2016 and July 2021. The search strategy utilized specific keywords relevant to SCZ, psychosis, and childhood trauma. The formulation of specified inclusion and exclusion criteria was necessary to ensure a comprehensive narrowed-down search, such as the inclusion of free full-text articles published or translated in English and exclusion of irrelevant subject areas. Using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines, a strategic search initially identified 741 articles; three additional articles were identified from citation searching. After relevance screening, duplicate removal, and quality appraisal, 12 studies from databases/registers and three from citation searching met the criteria proving relevance to our review with minimal evidence of bias. The final selected 15 studies included observational studies and reviews. A review of relevant data unveiled findings on childhood adversity, individual lived experiences, and their involvement in SCZ. Evidence suggests that certain neurobiological processes occur in brain after trauma. The inflammation and dysregulation from oxidative stress predispose patients to an at-risk-mental state, facilitating the progression to SCZ. This review encourages further evaluation of early trauma detection and the potential benefits of early intervention.