Current psychiatric nosology, strongly influenced by Kraepelin's dichotomy, classifies schizophrenia and bipolar disorder as separate diagnostic categories. However, growing evidence indicates that the two disorders may be more closely related than was thought in the past. Bipolar disorder and schizophrenia display considerable overlap in epidemiologic features; no risk factor is known to be specific to either. Furthermore, family studies reveal familial co-aggregation of the two disorders, and twin studies suggest a significant overlap in the genes contributing to schizophrenia, schizoaffective disorder, and mania. Finally, despite the difficulties in the identification of convincing genetic loci for psychiatric disorders, there are at least four genomic regions in which linkage has been shown for both schizophrenia and bipolar disorder. Thus, recent evidence increasingly supports a dimensional approach in the understanding of the functional psychoses, and this is expected to have implications for etiologic research and future clinical treatment.