Background The sole focus of models of insight on bio-medical perspectives to the complete exclusion of local, non-medical and cultural constructs mandates review. This study attempted to investigate the impact of insight, psychopathology, explanatory models of illness on outcome of first episode schizophrenia. Method Patients diagnosed to have DSM IV schizophrenia (n = 131) were assessed prospectively for insight, psychopathology, explanatory models of illness at baseline, 6, 12 and 60 months using standard instruments. Multiple linear and logistic regression and generalized estimating equations (GEE) were employed to assess predictors of outcome. Results We could follow up 95 (72.5%) patients. Sixty-five of these patients (68.4%) achieved remission. There was a negative relationship between psychosis rating and insight scores. Urban residence, fluctuating course of the initial illness, and improvement in global functioning at 6 months and lower psychosis rating at 12 months were significantly related to remission at 5 years. Insight scores, number of non-medical explanatory models and individual explanatory models held during the later course of the illness were significantly associated with outcome. Analysis of longitudinal data using GEE showed that women, rural residence, insight scores and number of non-medical explanatory models of illness held were significantly associated with BPRS scores during the study period. Conclusions Insight, the disease model and the number of non-medical model positively correlated with improvement in psychosis arguing for a complex interaction between the culture, context and illness variables. These finding argue that insight and explanatory models are secondary to psychopathology, course and outcome of the illness. The awareness of mental illness is a narrative act in which people make personal sense of the many challenges they face. The course and outcome of the illness, cultural context, acceptable cultural explanations and the prevalent social stigma interact to produce a complex and multifaceted understanding of the issues. This complexity calls for a nuanced framing of insight.