Bipolar disorder (BD) and schizophrenia (Sz) share dysfunction in prefrontal inhibitory brain systems, yet exhibit distinct forms of affective disturbance. We aimed to distinguish these disorders on the basis of differential activation in cortico-limbic pathways during voluntary emotion regulation. Patients with DSM-IV diagnosed Sz (12) or BD-I (13) and 15 healthy control (HC) participants performed a well-established emotion regulation task while undergoing functional magnetic resonance imaging. The task required participants to voluntarily upregulate or downregulate their subjective affect while viewing emotionally negative images or maintain their affective response as a comparison condition. In BD, abnormal overactivity (hyperactivation) occurred in the right ventrolateral prefrontal cortex (VLPFC) during up- and downregulation of negative affect, relative to HC. Among Sz, prefrontal hypoactivation of the right VLPFC occurred during downregulation (opposite to BD), whereas upregulation elicited hyperactivity in the right VLPFC similar to BD. Amygdala activity was significantly related to subjective negative affect in HC and BD, but not Sz. Furthermore, amygdala activity was inversely coupled with the activity in the left PFC during downregulation in HC (r=-0.76), while such coupling did not occur in BD or Sz. These preliminary results indicate that differential cortico-limbic activation can distinguish the clinical groups in line with affective disturbance: BD is characterized by ineffective cortical control over limbic regions during emotion regulation, while Sz is characterized by an apparent failure to engage cortical (hypofrontality) and limbic regions during downregulation.