Over the past decade, our understanding of the role of stress in serious mental illness has become more sophisticated. In this paper, we revisit the neural diathesis-stress model of schizophrenia that was initially proposed in 1997 and updated in 2008. In light of cumulative research findings, we must now encompass evidence on the premorbid periods of psychosis, and our more nuanced understanding of hypothalamic-pituitary-adrenal (HPA) axis function and its association with neurodevelopmental, epigenetic, neurotransmitter, and inflammatory processes, as well as brain structure and function. Giving consideration to the methodological complexities that have become more apparent as research in this area has burgeoned, the various indices of HPA axis function, and the different stages of illness, we review relevant research published since the 2008 update of the model. We conclude by proposing an extended neural diathesis-stress model that addresses the broader neurobiological context of stress psychobiology in psychosis progression. Implications of this model for best practice, with regards to both future research and treatment strategies, are discussed.