Post-traumatic stress disorder (PTSD) is often associated with verbal memory deficits, which could influence treatment outcome. We assessed neuropsychological functioning in individuals with PTSD and their response to cognitive– behavioural therapy (CBT). Treatment non-responders had significantly poorer performance on measures of verbal memory compared with responders and demonstrated narrative encoding deficits. Differences were not explained by IQ, performance on tasks of attention, initial PTSD severity, depression, time since trauma, or alcohol/substance misuse. Verbal memory deficits seem to diminish the effectiveness of CBT and should be considered in its implementation.