OBJECTIVE Both schizophrenia and bipolar disorder are hypothesized to involve disordered brain connectivity. Prior studies show low white matter integrity, measured with diffusion tensor imaging, for both disorders. The authors studied disease specificity and endophenotypic status of these abnormalities by examining patients and their unaffected relatives. METHOD The 513 participants included probands with schizophrenia, probands with psychotic bipolar disorder, their first-degree relatives, and healthy comparison subjects. Fractional anisotropy measures of white matter integrity were collected at two sites as a part of the Bipolar-Schizophrenia Network on Intermediate Phenotypes project. Relatives with cluster A or B personality characteristics were further examined. RESULTS Both the probands with schizophrenia and those with psychotic bipolar disorder showed lower fractional anisotropy than the comparison subjects in multiple white matter regions; differences were more marked in schizophrenia. No significant differences existed between proband groups, but in some brain regions scores on a measure of the dimensional continuum between schizophrenia and bipolar disorder, the Schizo-Bipolar Scale, showed correlations with fractional anisotropy. Many regions affected in schizophrenia probands showed similar but smaller effects in relatives, with a continuous fractional anisotropy decrease from healthy subjects to relatives to cluster A/B relatives to probands. The pattern for psychotic bipolar disorder was similar but involved fewer brain regions. Effects in bipolar relatives were limited to younger subjects. Fractional anisotropy decreased with age in all groups; this decrease was exaggerated in schizophrenia but not psychotic bipolar disorder. CONCLUSIONS Fractional anisotropy was highly heritable, supporting its value as a potential endophenotype.