Background Little is known about the experiential dynamics of the interaction between cannabis and vulnerability to psychosis. Aims To examine the effects of cannabis on psychotic symptoms and mood in patients with psychosis and healthy controls. Method Patients with a psychotic disorder (n = 42) and healthy controls (n = 38) were followed in their daily lives using a structured time-sampling technique. Results Daily life cannabis use predicted subsequent increases in positive affect and in patients, but not in controls, decreases in negative affect. In patients, but not in controls, cannabis use predicted increased levels of hallucinatory experiences. Mood-enhancing properties of cannabis were acute, whereas psychosis-inducing effects were sub-acute. There was no direct evidence for self-medication effects in daily life. Conclusions Patients with psychosis are more sensitive to both the psychosis-inducing and mood-enhancing effects of cannabis. The temporal dissociation between acute rewarding effects and sub-acute toxic influences may be instrumental in explaining the vicious circle of deleterious use in these patients.