Genetic factors contribute to schizophrenia and bipolar disorder, and linkage and association studies have been successful in identifying several candidate genes. However these genes explain only a very small part of the total population risk and the psychoses appear to be very heterogeneous with several models of genetic inheritance relevant to different groups of patients, including some cases caused by multiple common genetic variants, while others are single gene disorders. Studying chromosomal abnormalities is a useful strategy for identifying genes in illness, and patients with both mental retardation and psychosis form a special group where large chromosomal abnormalities detected by routine cytogenetic analysis are more prevalent than in patients with schizophrenia or bipolar disorder alone, or in the general population. Studying these patients provides valuable opportunities to identify genes contributing to psychoses. This review of the literature on large chromosomal rearrangements in patients with mental retardation and psychotic illness illustrates how schizophrenia and bipolar phenotypes are associated with a large number of different chromosomal disruptions. Recent genome wide association studies have identified an excess of small chromosomal deletions and duplications in schizophrenia, adding further support to the importance of chromosomal structural variation in psychotic illness. The genes GRIK4 and NPAS3, each associated with psychosis in patients with mental retardation are discussed to illustrate the value of rare cytogenetic events as a means to signpost neurobiological pathways of general importance for illness in the wider population.