Psychosis, like other major psychiatric disorders, is both genetically and clinically complex. Increasingly powerful molecular genetic studies have the potential to identify DNA variation that influences susceptibility to genetically complex disorders. There is a need to use a range of genetic approaches appropriate to identifying a spectrum of risk variants from the common through to the rare. Some variants might have large effects at the level of the individual but most are likely to have modest or small effects at both population and individual level. Extensive clinical heterogeneity is likely to have a significant impact on the power of even the largest studies and, more importantly, will lead to extensive variability between studies and hamper attempts at replication. If we are to realise the potential of molecular genetics, we need to overcome the major limitations imposed by current psychiatric diagnostic classifications and identify clinical phenotypes that reflect the presence of underlying entities with biological validity.