For many psychiatric conditions it is speculated that, rather than being single disease entities, they are a set of several disorders sharing clinical features but having (partly) different underlying causes. The possibility of measuring genetic variation on a large scale has given researchers new hope of identifying these disease subtypes that may differ with respect to prognosis, course, and response to treatment. However, although a considerable number of articles have been published suggesting that we may even be on the verge of making genotype-based diagnoses, the reality is that we do not have a good answer to even the most basic question of how measured genes could best be used to refine diagnostic categories. In this article, we show that for common psychiatric disorders, it may not be possible to simply look for similar genetic profiles in groups of patients. Instead, we propose a model assuming that genotypes affect phenotypes through more or less coherent etiological systems or pathogenic processes and argue that these etiological systems may provide a more fruitful basis for defining disease subtypes. Several examples from the literature that support the face validity of different aspects of our model are given. Finally, we argue that, given our limited knowledge of disease etiology, the use of discovery-oriented techniques requiring extensive data collection and (artificial) intelligent computer searches may be imperative, and discuss the prospect of model-based diagnosis to classify etiologically different disease subtypes.