Background: GABAergic (gamma-aminobutyric acidergic) function in the prefrontal cortex seems dysfunctional in patients with first-episode psychosis, but the impact of longer-term treatment and relationship to clinical outcomes and striatal activity are unknown. Methods: A longitudinal study of 39 antipsychotic-naïve and benzodiazepine-free patients with psychosis (22.4 ± 5.4 years, 64% women) and 54 matched healthy control participants (HCs) (22.2 ± 4.3 years, 61% women) who were followed up after 6 weeks (28 patients, 51 HCs), 6 months (17 patients, 47 HCs), and 2 years (21 patients, 43 HCs) was completed. GABA levels in the dorsal anterior cingulate cortex and striatal resting cerebral blood flow were assessed on a 3T magnetic resonance scanner at all visits. Results: GABA levels in the dorsal anterior cingulate cortex were significantly lower in patients at baseline and after 6 weeks but not after 6 months or 2 years. Analyses of groups separately revealed decreased GABA levels after 2 years in HCs but stable levels in patients. Treatment increased striatal resting cerebral blood flow after 6 weeks and 6 months but not after 2 years. GABA levels were negatively associated with striatal resting cerebral blood flow in both groups at all visits. Last, lower baseline GABA levels in patients were related to less functional improvement after 2 years. Conclusions: The findings suggest a different trajectory of GABA levels and striatal perfusion in first-episode patients over 2 years of antipsychotic treatment compared with HCs and indicate a downregulatory role of prefrontal GABAergic function on the striatum. Moreover, abnormally low prefrontal GABA level at illness onset may be a marker for a more severe prognosis.