The debate endures as to whether schizophrenia and bipolar disorder are separate entities or different manifestations of a single underlying pathological process. Here, we argue that this sterile argument obscures the fact that the truth lies somewhere in between. Thus, recent studies support a model whereby, on a background of some shared genetic liability for both disorders, patients with schizophrenia have been subject to additional genetic and/or environmental factors that impair neurodevelopment; for example, copy number variants and obstetric complications are associated with schizophrenia but not with bipolar disorder. As a result, children destined to develop schizophrenia show an excess of neuromotor delays and cognitive difficulties while those who later develop bipolar disorder perform at least as well as the general population. In keeping with this model, cognitive impairments and brain structural abnormalities are present at first onset of schizophrenia but not in the early stages of bipolar disorder. However, with repeated episodes of illness, cognitive and brain structural abnormalities accumulate in both schizophrenia and bipolar disorder, thus clouding the picture.