Although family psychoeducation has been shown to be highly efficacious in the treatment of schizophrenia, the mechanisms underlying the treatment's success are poorly understood. The therapeutic alliance in behavioral family management (BFM) was examined to determine whether the alliance plays a role in the efficacy of this treatment. One early BFM session (mean session = 6.5) involving 28 schizophrenia patients and their relatives who participated in the National Institute of Mental Health's Treatment Strategies in Schizophrenia study was coded using the System for Observing Family Therapy Alliances. Results indicated that when relatives developed a positive therapeutic alliance, patients were less likely to show prodromal signs of relapse and be rehospitalized over a 2-year follow-up period. When patients developed a positive alliance, relatives became less rejecting and were less likely to feel burdened over a 2-year period. The data suggest that the development of a positive therapeutic alliance within family psychoeducation may play an important role in preventing the escalation of psychotic symptoms and improving family relationships.