Psychiatric disorders, including affective disorders (AD) and schizophrenia (SZ) are among the most common disabling brain diseases in Western populations and result in high costs in terms of morbidity as well as mortality. Although their etiology and pathophysiology is largely unknown, family-, twin-, and adoption studies argue for a strong genetic determination of these disorders. These studies indicate that there is between 40 and 85% heritability for these disorders but point also to the importance of environmental factors. Therefore, any research strategy aiming at the identification of genes involved in the development of AD and SZ should account for the complex nature (multifactorial) of these disorders. During the last decade, molecular genetic studies have contributed a great deal to the identification of genetic factors involved in complex disorders. Here we provide a comprehensive review of the most promising genes for AD and SZ, and the methods and approaches that were used for their identification. Also, we discuss the current knowledge and hypotheses that have been formulated regarding the effect of variations on protein functioning as well as recent observations that point to common molecular mechanisms.