BACKGROUND Although a number of investigations have reported cognitive deficits in patients with bipolar disorder, relatively few have focused on the relationship between these impairments and clinical outcome. METHODS In order to help clarify the pattern of and extent to which cognitive deficits are present at the onset of illness and their relationship to outcome, we examined 26 bipolar patients during their first hospitalization and 20 psychiatrically healthy control subjects. All subjects completed tests of frontal/executive control, psychomotor speed and memory function at baseline and self-reports of clinical recovery (time to recover in days) at 12 months post study enrollment. RESULTS At baseline, first episode bipolar patients demonstrated greater deficits relative to control subjects on neurocognitive measures, and a significant association was detected between time to recover and performance on a measure of frontal/executive function (interference condition of the Stroop; p=.05; derived interference: p=.04). A trend towards significance was also demonstrated between time to clinical recovery and verbal fluency (p=.06). CONCLUSIONS These findings indicate that neuropsychological deficits are seen early in the course of bipolar disorder, prior to the effects of multiple or prolonged episodes, and may be associated with clinical outcome. Future studies are needed to determine whether changes in inhibitory processing or other cognitive function predict clinical outcome or are associated with treatment response.