This chapter covers the staging evolution of the most important brain functioning impairments, as measured with electroencephalography (EEG), in psychosis spectrum and in severe mood disorders. The current state of the literature demonstrates that although these impairments have been extensively studied in all stages of schizophrenia, the results remain highly inconsistent in bipolar disorder and major depressive disorder, and almost nonexistent for the early stages of these illnesses. Indeed, it is currently impossible to draw any conclusion with regard to the state or trait character of any of the EEG impairments in both major depressive and bipolar disorders. As for psychosis, the most promising staging markers are the pitch mismatch negativity, as well as the P300 event-related potentials, as these components seem to deteriorate with increasing severity of the illness. Longitudinal studies will be necessary to follow the course of the EEG-measured impairments in ‘at-risk’ individuals who are later diagnosed with a severe mental illness. Furthermore, and most importantly, if some of these markers are going to be used as diagnostic tools in the establishment of the stage of a psychotic disorder, a quantifying parameter will need to be identified as well as normal and pathological ranges.