The Edinburgh High Risk Study is a longitudinal study (1994-2005) into individuals at enhanced risk of schizophrenia, so called as they have first and second degree relatives with the disease.  The study has employed serial clinical, neuropsychological assessments and structural and functional magnetic resonance imaging (fMRI) in order to track changes over time in individuals who develop the disease. One of the findings of the study was that a large proportion of the High Risk participants reported isolated or transient psychotic symptoms (nearly always either a type of delusion of hallucination) during clinical interview. The aim of this thesis was to investigate ToM abilities in these high risk individuals through a battery of ToM and self-monitoring neuropsychological tasks and a visual joke fMRI paradigm. A sample of the larger EHRS cohort was recruited. The High Risk participants were split into two groups on the basis of the presence or absence of positive psychotic symptoms. HR+ (n=12): individuals who had reported transient psychotic symptoms in at least one PSE interview during their participation in the EHRS. HR- (n=12): individuals who had never reported any psychotic or transiently psychotic symptoms or otherwise, during PSE interview. For secondary analyses investigating symptomatology, the HR+ group was then further split into the following two groups based on past or present psychotic symptoms. HR+Now (n=6): individuals who reported transient psychotic symptoms on the day of testing. HR+Ever (n=6): individuals who had reported transient psychotic symptoms in a previous clinical interview but not on the day of testing. In addition, a group of five individuals (HRill) who had initially been high risk but had developed schizophrenia were recruited. On the ToM neuropsychological tasks significant group differences were observed on two of the three tasks for the HR+ group, particularly in those who had experienced symptoms at or around the time of testing (HR+Now).  The observed ToM deficits appeared to be primarily related to state effects rather than trait effects. The fMRI task provided robust activations across the groups in areas previously associated with ToM abilities in the literature. Significant between group activations were observed in the Prefrontal Cortex (PFC) with the HR- activating significantly greater than the HR+ in these regions. Both the secondary state specific analysis and a third post hoc analysis further investigating state effects showed significant PFC between group differences. The observed PFC dysfunction in the HR+ groups is interpreted as the neural correlate for the compromised ToM ability seen in the neuropsychological tasks.