BACKGROUND: There is support that Neuregulin 1 (NRG1) plays a role in susceptibility to schizophrenia but limited evidence for its involvement in bipolar disorder. We wished to investigate further the involvement of NRG1 in schizophrenia and bipolar disorder. METHODS: We used hierarchical association analysis in parent-offspring trios, 634 with schizophrenia/schizoaffective disorder (SZ/SA) and 243 with bipolar 1 disorder (BP1). The primary analysis was the markers defining the "core Icelandic haplotype" (HAP(ICE)). We undertook polymorphism discovery, additional genotyping, and also explored phenotypic associations, as a secondary analysis aimed at refining the signal. RESULTS: The initial global haplotype test yielded significant evidence for association (p = .01) with SZ/SA and BP1 (p = .004), although HAP(ICE) was not overtransmitted. The marker showing strongest evidence for association in the deCODE studies, SNP8NRG221533, was associated with SZ/SA (p(corrected) = .039) and with BP1 (p(corrected) = .039), with BP1 showing association to the opposite allele as SZ/SA. The pattern of transmission at SNP8NRG221533 was significantly different in SZ/SA than in BP1 (p = .0004). Secondary analyses of markers and phenotypes provided no additional evidence for association to SZ/SA. However, a new marker, rs7014762, was associated with an a priori defined "typical" bipolar phenotype characterized by excellent recovery between episodes and no mood incongruent features (p(corrected) = .003). CONCLUSIONS: Our data provide significant levels of support for NRG1 as a susceptibility gene for both major forms of psychosis, and this cannot be interpreted as being due to population stratification. More tentatively, they also might indicate the presence of multiple alleles that influence the psychosis phenotype.