Multiple lines of evidence suggest the presence of altered neuroimmune processes in patients with schizophrenia (Sz) and severe mood disorders. Recent studies using a novel free water diffusion tensor imaging (FW DTI) approach, proposed as a putative biomarker of neuroinflammation, atrophy, or edema, have shown significantly increased FW in patients with Sz. However no studies to date have investigated the longitudinal stability of FW alterations during the early course of psychosis, nor have studies focused separately on FE psychosis patients with Sz or bipolar disorder (BD) with psychotic features. The current study included 188 participants who underwent diffusion magnetic resonance imaging scanning at baseline. Sixty-four participants underwent follow-up rescanning after 12 months. DTI-based alterations in patients were calculated using voxelwise tract-based spatial statistics and region of interest analyses. Patients with FE psychosis, both Sz and BD, exhibited increased FW at illness onset which remained unchanged over the 12-month follow-up period. Preliminary analyses suggested that antipsychotic medication exposure was associated with higher FW in gray matter that reached significance in the BD group. Higher FW in white matter correlated with negative symptom severity. Our results support the presence of elevated FW at the onset of psychosis in both Sz and BD, which remains stable during the early course of the illness, with no evidence of either progression or remission.