Patients with first-episode psychosis experience psychotic symptoms for a mean of up to 2 years prior to initiation of treatment, and long duration of untreated psychosis (DUP) is associated with poor clinical outcomes. Meanwhile, evidence compiled from numerous studies suggests that longer DUP is not associated with structural brain abnormalities. To date, few studies have examined the relationship between DUP and functional neuroimaging measures. In the present study, we used seed-based resting-state functional connectivity to examine the impact of DUP on corticostriatal circuitry. We included 83 patients with early phase schizophrenia and minimal exposure to antipsychotic drugs (<2 years), who underwent resting state scanning while entering 12 weeks of prospective treatment with second-generation antipsychotic drugs. Functional connectivity maps of the striatum were generated and examined in relation to DUP as a covariate. Mediation analyses were performed on a composite measure of corticostriatal connectivity derived from the significant results of our DUP analysis. We found that longer DUP correlated with worse response to treatment as well as overall decreased functional connectivity between striatal nodes and specific regions within frontal and parietal cortices. Moreover, the relationship between DUP and treatment response was significantly mediated by corticostriatal connectivity. Our results indicate that variation in corticostriatal circuitry may play a role in the relationship between longer DUP and worsened response to treatment. Future prospective studies are necessary to further characterize potential causal links between DUP, striatal circuitry and clinical outcomes.