This study sought to systematically investigate whether prefrontal cortex grey matter volume reductions are valid endophenotypes for schizophrenia, specifically investigating their presence in unaffected relatives, heritability, genetic overlap with the disorder itself and finally to contrast their performance on these criteria with putative neuropsychological indices of prefrontal functioning. We used a combined twin and family design and examined four prefrontal cortical regions of interest. Superior and inferior regions were significantly smaller in patients. However, the volumes of these same regions were normal in unaffected relatives and therefore, we could confirm that such deficits were not due to familial effects. Volumes of the prefrontal and orbital cortices were, however, moderately heritable, but neither shared a genetic overlap with schizophrenia. Total prefrontal cortical volume reductions shared a significant unique environmental overlap with the disorder, suggesting that the reductions were not familial. In contrast, prefrontal (executive) functioning deficits were present in the unaffected relatives, were moderately heritable and shared a substantial genetic overlap with liability to schizophrenia. These results suggest that the well recognized prefrontal volume reductions are not related to the same familial influences that increase schizophrenia liability and instead may be attributable to illness related biological changes or indeed confounded by illness trajectory, chronicity, medication or substance abuse, or in fact a combination of some or all of them.