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Context: Studies on acute psychosis in patients from India report good outcome. A small proportion of these patients may suffer relapses or other develop major psychiatric disorders later. Aim: The aim of this study was to examine the diagnostic stability of acute psychosis in patients from India. Materials and Methods: The records of patients who presented with the first episode of acute and transient psychotic disorder (n=57) over 1 year (2004) were analyzed, and the follow-up data at the end of 1 and 2 years were recorded. Results: The mean age of the sample was 30.72 years. The mean duration of illness episode was 18.15±17.10 days. The follow-up data were available for 77.2% (n=44) and 75.4% (n=43) of the sample at the end of first and second years. Relapse was recorded in 47.4 and 54.4% at the end of first and second years, respectively. Conclusion: The diagnosis changed into other disorders such as bipolar disorder, schizophrenia, and unspecified psychosis, while a majority retained the initial diagnosis of acute psychosis. The findings suggest that acute psychosis is a relatively stable condition. A small percentage of these patients may go on to develop schizophrenia or bipolar disorder.