Research on art therapy and psychosis has typically focused on individuals who have experienced psychotic symptoms for many years. This study used a grounded theory methodology to explore how service users experience art therapy following their first diagnosis of a psychotic disorder, and the possible mechanisms through which art therapy might be helpful for such individuals. Eight participants were interviewed, with two participants being interviewed twice. A preliminary theory was created and seven categories were constructed from the data, namely unpressured atmosphere, pleasure and engagement in art-making, expression and communication, connecting with others, changing emotional experience and experience of self, supporting recovery and continuation of art, and barriers. Participants reported that through the atmosphere of art therapy, art-making, and communication, they were able to build relationships, connect with others, experience a sense of commonality, absorption, sense of freedom and discover alternative perspectives and different understandings. Whilst this study suffered from some limitations, the results build on the current research base by suggesting possible processes and mechanisms through which art therapy is helpful, and focusing on a previously under-represented population. The findings are considered alongside existing research and theoretical perspectives. Clinical implications and recommendations for future research are also highlighted.