The onset of schizophrenia is typically preceded by a prodromal period lasting several years during which sub-threshold symptoms may be identified retrospectively. Clinical interviews are currently used to identify individuals who have an ultra-high risk (UHR) of developing a psychotic illness with a view to provision of interventions that prevent, delay or reduce severity of future mental health issues. The utility of bio-markers as an adjunct in the identification of UHR individuals is not yet established. Several event-related potential measures, especially mismatch-negativity (MMN), have been identified as potential biomarkers for schizophrenia. In this 12-month longitudinal study, demographic, clinical and neuropsychological data were acquired from 102 anti-psychotic naive UHR and 61 healthy controls, of whom 80 UHR and 58 controls provided valid EEG data during a passive auditory task at baseline. Despite widespread differences between UHR and controls on demographic, clinical and neuropsychological measures, MMN and P3a did not differ between these groups. Of 67 UHR at the 12-month follow-up, 7 (10%) had transitioned to a psychotic illness. The statistical power to detect differences between those who did or did not transition was limited by the lower than expected transition rate. ERPs did not predict transition, with trends in the opposite direction to that predicted. In exploratory analysis, the strongest predictors of transition were measures of verbal memory and subjective emotional disturbance.