Psychosis used to be thought of as essentially a biological condition unamenable to psychological interventions. However, more recent research has shown that positive symptoms such as delusions and hallucinations are on a continuum with normality and therefore might also be susceptible to adaptations of the cognitive behavioral therapies found useful for anxiety and depression. In the context of a model of cognitive, emotional, and social processes in psychosis, the latest evidence for the putative psychological mechanisms that elicit and maintain symptoms is reviewed. There is now good support for emotional processes in psychosis, for the role of cognitive processes including reasoning biases, for the central role of appraisal, and for the effects of the social environment, including stress and trauma. We have also used virtual environments to test our hypotheses. These developments have improved our understanding of symptom dimensions such as distress and conviction and also provide a rationale for interventions, which have some evidence of efficacy. Therapeutic approaches are described as follows: a collaborative therapeutic relationship, managing dysphoria, helping service users reappraise their beliefs to reduce distress, working on negative schemas, managing and reducing stressful environments if possible, compensating for reasoning biases by using disconfirmation strategies, and considering the full range of evidence in order to reduce high conviction. Theoretical ideas supported by experimental evidence can inform the development of cognitive behavior therapy for persistent positive symptoms of psychosis.