Substance-induced psychosis (SIP) is characterized by both substance use and a psychotic state, and it is assumed that the first causes the latter. In ICD-10 the diagnosis is categorized as and grouped together with substance use disorders, and to a large extent also treated as such in the health care system. Though criticism of the diagnostic construct of SIP dates back several decades, numerous large and high-quality studies have been published during the past 5–10 years that substantiate and amplify this critique. The way we understand SIP and even how we name it is of major importance for treatment and it has judicial consequences. It has been demonstrated that substance use alone is not sufficient to cause psychosis, and that other risk factors besides substance use are at play. These are risk factors that are also known to be associated with schizophrenia spectrum disorders. Furthermore, register-based studies from several different countries find that a large proportion, around one in four, of those who are initially diagnosed with an SIP over time are subsequently diagnosed with a schizophrenia spectrum disorder. This scoping review discusses the construct validity of SIP considering recent evidence. We challenge the immanent causal assumption in SIP, and advocate that the condition shares many features with the schizophrenia spectrum disorders. In conclusion, we argue that SIP just as well could be considered a first-episode psychotic disorder in patients with substance use.