Abstract: Preclinical rodent models suggest that psychosis involves alterations in the activity and glutamatergic function in the hippocampus, driving dopamine activity through projections to the striatum. The extent to which this model applies to the onset of psychosis in clinical subjects is unclear. We assessed whether interactions between hippocampal glutamatergic function and activity/striatal connectivity are associated with adverse clinical outcomes in people at clinical high-risk (CHR) for psychosis. We measured functional Magnetic Resonance Imaging of hippocampal activation/connectivity, and 1H-Magnetic Resonance Spectroscopy of hippocampal glutamatergic metabolites in 75 CHR participants and 31 healthy volunteers. At follow-up, 12 CHR participants had transitioned to psychosis and 63 had not. Within the clinical high-risk cohort, at follow-up, 35 and 17 participants had a poor or a good functional outcome, respectively. The onset of psychosis (ppeakFWE = 0.003, t = 4.4, z = 4.19) and a poor functional outcome (ppeakFWE < 0.001, t = 5.52, z = 4.81 and ppeakFWE < 0.001, t = 5.25, z = 4.62) were associated with a negative correlation between the hippocampal activation and hippocampal Glx concentration at baseline. In addition, there was a negative association between hippocampal Glx concentration and hippocampo-striatal connectivity (ppeakFWE = 0.016, t = 3.73, z = 3.39, ppeakFWE = 0.014, t = 3.78, z = 3.42, ppeakFWE = 0.011, t = 4.45, z = 3.91, ppeakFWE = 0.003, t = 4.92, z = 4.23) in the total CHR sample, not seen in healthy volunteers. As predicted by preclinical models, adverse clinical outcomes in people at risk for psychosis are associated with altered interactions between hippocampal activity and glutamatergic function.