Cognitive impairment in schizophrenia and that in bipolar disorder share some similarities. However, more literature exists on cognitive impairment in schizophrenia than in bipolar disorder. The NIMH Measurement and Treatment Research to Improve Cognition in Schizophrenia (MATRICS) Initiative has identified several cognitive domains that are dysfunctional in schizophrenia and should be considered in the context of clinical trials. Cognitive impairments in these domains are also seen in bipolar disorder, but they tend to be milder. These impairments seem to be a core feature of schizophrenia and exist outside of mood episodes in bipolar disorder. Impairments are present in unaffected relatives of patients with schizophrenia or bipolar disorder, can serve as an endophenotype for both illnesses, and are linked to community functioning.