Despite its initial promise, there has been both progress and some set backs in genetic studies of the major psychiatric disorders of childhood and adulthood. Finding true susceptibility genes may be delayed because the most genetically informative phenotypes are not being used on a regular basis in linkage analysis and association studies. It is highly likely that using alternative phenotypes instead of DSM diagnostic categories will lead more rapid success in the search for these susceptibility genes. The objective of this paper is to describe the different types of informative phenotypes that can be employed in psychiatric genetic studies, to clarify their uses, to identify several methodologic issues the design and conduct of linkage and association studies that use alternative phenotypes and finally to suggest possible solutions to those difficulties. This is a conceptual review with a focus on methodological issues that may arise in psychiatric genetics and examples are taken from the literature on autism, schizophrenia, bipolar disorder, and alcoholism.