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<b>Background:</b> Voxel-based morphometry studies have repeatedly highlighted the presence of distributed gray matter changes in schizophrenia, but to date, it is not clear if clinically useful prognostic information can be gleaned from structural imaging. The suspected association between gray matter volume (GMV) and duration of psychotic illness, antipsychotic exposure, and symptom severity also limits the prognostic utility of morphometry. We address the question of whether morphometric information from patients with drug-naive first-episode psychosis can predict the linear trajectory of symptoms following early antipsychotic intervention using a longitudinal design. <b>Method:</b> Sixty-two first-episode, drug-naive patients with schizophrenia underwent brain magnetic resonance imaging scans at baseline, treated with antipsychotics, and rescanned after 1-year follow-up. Positive and Negative Syndrome Scale (PANSS) was used to assess their clinical manifestations. A multivariate approach to detect covariance-based network-like spatial components [Source Based Morphometry (SBM)] was performed to analyze the GMV. Paired <i>t</i> tests were used to study changes in the loading coefficients of GMV in the spatial components between two time points. The reduction in PANSS scores between the baseline (T0) and 1-year follow-up (T1) expressed as a ratio of the baseline scores (reduction ratio) was computed for positive, negative, and disorganization symptoms. Separate multiple regression analyses were conducted to predict the longitudinal change in symptoms (treatment response) using the loading coefficients of spatial components that differed between T0 and T1 with age, gender, duration of illness, and antipsychotic dose as covariates. We also tested the putative "toxicity" effects of baseline symptom severity on the GMV at 1 year using multiple regression analysis. <b>Results:</b> Of the 30 spatial components of gray matter extracted using SBM, loading coefficients of anterior cingulate cortex (ACC), insula and inferior frontal gyrus (IFG), superior temporal gyrus (STG), middle temporal gyrus (MTG), precuenus, and dorsolateral prefrontal cortex (DLPFC) reduced with time in patients. Specifically, the lower volume of insula and IFG at baseline predicted a lack of improvement in positive and disorganization symptoms. None of the symptom severity scores (positive, negative, or disorganization) at baseline independently predicted the reduced GMV at 1 year. <b>Conclusions:</b> The baseline deficit in a covariance-based network-like spatial component comprising of insula and IFG is predictive of the clinical course of schizophrenia. We do not find any evidence to support the notion of symptoms per se being neurotoxic to gray matter tissue. If judiciously combined with other available predictors of clinical outcome, multivariate morphometric information can improve our ability to predict prognosis in schizophrenia.