A 44 base pair insertion ("l")/deletion ("s") polymorphism (called 5-HTTLPR) in the 5' promoter region of the human serotonin transporter gene (SLC6A4) modulates expression and has been associated to anxiety and depressive traits in otherwise healthy individuals. In individuals with psychiatric diagnoses, including schizophrenia, it seems to modulate symptom severity. Thus, it may be a disease modifying gene. In this study, 92 patients with psychosis (including schizophrenia, schizoaffective disorder, bipolar psychosis, and major depression) were assessed at their first hospital admission. Symptom ratings, including SANS negative symptoms, SAPS positive symptoms, and SCID depressive symptoms, were obtained. Stress was also assessed. Bi-allelic genotyping at the 5-HTTLPR locus was done. Using multiple regression models, we found that 5-HTTLPR genotype (especially in dominant models) accounted for a significant portion of the variance in SCID Depression and SANS (about 5%). In particular we found that the l allele was associated with greater psychopathology. This is consistent with our review of the literature and is at variance with findings in healthy controls that the s allele is associated with greater anxiety and depression levels. We believe that this set of findings argues for principled reversal of directionality in associations at the 5-HTTLPR locus and raises the possibility that allelic variation may have very different consequences for personality traits or psychiatric symptoms depending on epistasis or epigenetic context. Furthermore, these results also imply that categorical diagnostic distinctions may still be relevant in understanding some genetic effects.