While dopamine systems have been implicated in the pathophysiology of schizophrenia and psychosis for many years, how dopamine dysfunction generates psychotic symptoms remains unknown. Recent theoretical interest has been directed at relating the known role of midbrain dopamine neurons in reinforcement learning, motivational salience and prediction error to explain the abnormal mental experience of psychosis. However, this theoretical model has yet to be explored empirically. To examine a link between psychotic experience, reward learning and dysfunction of the dopaminergic midbrain and associated target regions, we asked a group of first episode psychosis patients suffering from active positive symptoms and a group of healthy control participants to perform an instrumental reward conditioning experiment. We characterized neural responses using functional magnetic resonance imaging. We observed that patients with psychosis exhibit abnormal physiological responses associated with reward prediction error in the dopaminergic midbrain, striatum and limbic system, and we demonstrated subtle abnormalities in the ability of psychosis patients to discriminate between motivationally salient and neutral stimuli. This study provides the first evidence linking abnormal mesolimbic activity, reward learning and psychosis.