Aim To evaluate whether internalized stigma predicts social anxiety, functioning, and subjective recovery in first episode psychosis differently between group cognitive-behavioral therapy that addressed internalized stigma and cognitive remediation. Methods Data was derived from a randomized controlled trial comparing group cognitive-behavioral therapy for social anxiety with group cognitive remediation in 96 first-episode psychosis participants (18-35 years) with social anxiety disorder. Social anxiety, internalized stigma, functioning, and subjective recovery were assessed at baseline, post-intervention, three and six months later. Results Linear mixed models revealed a significant positive effect of internalized stigma on social anxiety, functioning, and subjective recovery, with no significant interaction between internalized stigma and treatment group, nor with each time point for all three outcomes. Conclusion Results show that internalized stigma did predict improved outcomes but was not specific to group cognitive-behavioral therapy, relative to group cognitive remediation in the current sample, suggesting a general therapeutic benefit of group therapy.