Background Low levels of self-esteem have been implicated as both a cause and a consequence of severe mental disorders. The main aims of the study were to examine whether premorbid adjustment has an impact on the subject's self-esteem, and whether lowered self-esteem contributes to the development of delusions and hallucinations. Method A total of 113 patients from the Thematically Organized Psychosis research study (TOP) were included at first treatment. The Positive and Negative Syndrome Scale (PANSS) was used to assess present symptoms. Premorbid adjustment was measured with the Premorbid Adjustment Scale (PAS) and self-esteem by the Rosenberg Self-Esteem Scale (RSES). Results Premorbid social adjustment was significantly related to lower self-esteem and explained a significant proportion of the variance in self-esteem. Self-esteem was significantly associated with the levels of persecutory delusions and hallucinations experienced by the patient and explained a significant proportion of the variance even after adjusting for premorbid functioning and depression. Conclusion There are reasons to suspect that premorbid functioning is an important aspect in the development of self- esteem, and, furthermore, that self-esteem is associated with the development of delusions and hallucinations.