The first episode of schizophrenia, usually considered the first five years of the illness brings with it a challenging period of acceptance and adaptation for patients and their families. As part of this process, feelings of shame and guilt about having schizophrenia are common and need to be treated by clinicians in ways that are sensitive to patients’ deep-rooted feelings that now they are stigmatized. This article examines the intra- and inter-psychic phenomena that contribute to feelings of shame and guilt and offers suggestions with clinical examples of how to work towards losing the stigma. The treatment descriptions and examples are taken from work with 71 patients in the first episode of schizophrenia, many of whom experienced intense feelings of unworthiness, expressed in their words and behavior as guilt and shame.