In Foucha v. Louisiana (1992), the United States Supreme Court ruled that individuals adjudicated not guilty by reason of insanity (NGRI) could not remain in a forensic hospital if they were no longer mentally ill and dangerous. Since this decision, a variety of important questions have arisen related to the insanity defense and what should happen to insanity acquittees post‐adjudication. This article provides an analysis of clinical issues confronting forensic examiners when psychosis as a result of substance abuse is the underlying condition supporting an insanity defense. To accomplish this analysis, this article provides the reader with a review of literature showing the complex relationship between psychosis and substance abuse. Second, this article investigates how substance‐induced psychosis may impact both insanity opinions and subsequent conditional release decisions. Third, the article aims to provide research‐driven information to assist clinicians in conducting conditional release evaluations. Finally, this paper provides a model for evaluating dangerousness in the context of conditional release evaluations. Given the substantial comorbidity between substance abuse and psychosis, it is critical for researchers and clinicians to consider potential effects of substance abuse when evaluating insanity acquittees for conditional release, especially as substance use relates to future dangerousness. Copyright © 2016 John Wiley & Sons, Ltd.