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OBJECTIVE: The urban environment and familial liability are risk factors for psychotic illness, but it is not known whether a biological synergism exists between these two proxy causes. METHOD: The amount of biological synergism between familial liability (defined as a family history of delusions and/or hallucinations necessitating psychiatric treatment) and a five-level rating of population density of place of residence was estimated from the additive statistical interaction in a general population risk set of 5,550 individuals. RESULTS: Both the level of urbanicity (adjusted summary odds ratio=1.57, 95% CI=1.30–1.89) and familial liability (adjusted odds ratio=4.59, 95% CI=2.41–8.74) increased the risk for psychotic disorder, independently of each other. However, the effect of urbanicity on the additive scale was much larger for individuals with evidence of familial liability (risk difference=2.58%) than in those without familial liability (risk difference=0.40%). An estimated 60%–70% of the individuals exposed to both urbanicity and familial liability had developed psychotic disorder because of the synergistic action of the two proxy causes. CONCLUSIONS: Given that familial clustering of psychosis is thought to reflect the effect of shared genes, the findings support a mechanism of gene-environment interaction in the causation of psychosis.