The classification of schizophrenia and bipolar disorder as two separate disease entities has been hotly debated almost from the moment of its inception with Kraepelins descriptions of “dementia praecox” and “manic-depressive insanity” in 1896. Kraepelins nosologic distinction was based on clinical observation of symptomatology and outcome, and even today, despite major advances in science and technology, differential diagnosis of psychosis relies on the clinical course of illness. However, new evidence from diverse fields, e.g., genetics, neuropsychology, and brain imaging, have refueled the debate about whether or not schizophrenia and bipolar disorder represent distinct diseases, leading some to postulate that schizophrenia and bipolar disorder represent different manifestations of psychosis along a continuum with schizoaffective disorder representing an intermediate subtype. To this discourse, we add our own recent postmortem anatomic findings indicating that cellular pathology in the dorsolateral prefrontal cortex in schizophrenia and bipolar disorder differs not just in magnitude but also in direction, in laminar scope, and in relative involvement of neuronal and glial cell types. Thus, distinct morphometric alterations in the dorsolateral prefrontal cortex underlie what appear on neuroimaging analysis to be similar abnormalities in structural and metabolic function in the prefrontal cortex, and the diverse cellular pathology in the dorsolateral prefrontal cortex in these two disorders may account for the greater deficit in schizophrenia on cognitive tasks involving memory, problem solving and abstraction.