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OBJECTIVE: Impaired olfactory identification ability has previously been demonstrated in patients with schizophrenia. This study assessed olfactory function in psychotic and nonpsychotic members of multigenerational families with familial schizophrenia to determine whether deficits were present in both groups. METHOD: The University of Pennsylvania Smell Identification Test was administered birhinally to three groups of subjects aged less than 65 years: 19 psychotic and 27 nonpsychotic members of families with familial schizophrenia and 43 age- and sex-matched healthy volunteers. RESULTS: Nonpsychotic family members had significantly higher mean University of Pennsylvania Smell Identification Test scores than psychotic family members but were impaired relative to the healthy volunteer group. These group differences could not be accounted for by age, sex, or smoking habit. Fifty-eight percent of the psychotic and 34% of the nonpsychotic family members performed in the microsmic (impaired) range, compared to 9% of the healthy volunteers. CONCLUSIONS: Impaired olfactory deficits may aggregate in families with schizophrenia and may be indicative of a genetic predisposition to psychosis.