Abnormal hypothalamic-pituitary-adrenal (HPA) axis function, as indexed by elevated diurnal cortisol levels and/or a blunted cortisol awakening response (CAR), has been observed among patients with first episode psychosis and associated with neurocognitive deficits in this population. However, the extent to which these features precede illness onset is unclear. The current study aimed to determine whether children who are at putatively elevated risk for psychosis because they present multiple antecedents of schizophrenia (ASz), and high-risk children with a family history of illness (FHx), are characterized by abnormal cortisol levels when compared with their typically developing (TD) peers. A further aim was to investigate the extent to which cortisol levels are associated with psychosocial stress and neurocognitive function. Thirty-three ASz children, 22 FHx children, and 40 TD children were identified at age 9-12 years using a novel community-based screening procedure or as relatives of individuals with schizophrenia. All participants were antipsychotic-naive and not currently seeking treatment for their symptoms. At age 11-14 years, participants provided salivary cortisol samples and completed psychosocial stress measures and tests of memory and executive function. Results indicated that FHx children, but not ASz children, were characterized by a blunted CAR relative to their TD peers (effect size = -0.73, p = 0.01) that was not explained by psychosocial stress exposure or by distress relating to these experiences. Neither FHx nor ASz children were characterized by elevated diurnal cortisol. Among both FHx and ASz children, more pronounced HPA axis function abnormalities (i.e., higher diurnal cortisol levels and greater blunting of the CAR) were associated with poorer performance on tests of verbal memory and executive function. These findings support the notion that at least some HPA axis abnormalities described in psychosis precede illness onset, rather than being a subsequent epiphenomenon. We speculate that the blunted CAR may constitute an early (potentially genetically mediated) marker of psychosis vulnerability, whilst elevated diurnal cortisol levels may emerge only proximally to disease onset.