Social cognitive deficits are associated with psychotic symptoms, but the nature of this association remains unknown. This study uses a genetically sensitive cross-trait cross-sibling design to investigate the nature of the overlap between both phenotypes. A sample of 1032 patients, 1017 of their healthy siblings, and 579 control subjects were recruited within the Dutch Genetic Risk and Outcome in Psychosis (GROUP) study. Participants completed a battery of cognitive tests, including 2 social cognitive tests on theory of mind (ToM) and emotion recognition. Within siblings, symptoms were assessed with the Structured Interview for Schizotypy--Revised. The Positive and Negative Syndrome Scale was used to assess patients' symptoms. Within patients, social cognitive performance was consistently and significantly associated with disorganized and, to a lesser degree, with negative symptoms. Associations with positive symptoms were significant, but smaller. Suggestive of a shared etiology, both social cognitive factors showed significant familial clustering. The associations between patients' ToM and subclinical symptoms in siblings were nonsignificant, suggesting that their overlap within patients is due to individual rather than shared familial factors. Indicative of a shared etiology, familial covariation was present between patients' emotion recognition ability and disorganized and, albeit to a lesser degree, positive but not negative subclinical symptoms in siblings.