Recent studies have described G72 and DAAO as susceptibility genes for schizophrenia and bipolar disorder. Both genes modulate glutamate neurotransmission, which plays a key role in neurocognitive function and is thought to be altered in these disorders. Moreover, in vitro transcription studies indicate that the two genes interact with each other at the molecular level. However, it is unclear how these genes affect cortical function and whether their effects interact with each other. The aim of this study was therefore to examine the impact of G72 rs746187 and DAAO rs2111902 genotypes on brain function in schizophrenia, bipolar disorder and healthy volunteers. We used functional magnetic resonance imaging and an overt verbal fluency paradigm to examine brain function in a total of 120 subjects comprising 40 patients with schizophrenia, 33 patients with bipolar I disorder and 47 healthy volunteers. A significant 3 way interaction between G72, DAAO and diagnosis was detected in the right middle temporal gyrus (x=60 y=-12 z=-12; z-score: 5.32; p<0.001 after family-wise error correction), accounting for 8.5% of the individual variance in activation. These data suggest that there is a nonadditive interaction between the effects of variations in the genes implicated in glutamate regulation that affects cortical function. Also, the nature of this interaction is different in patients and healthy controls, providing support for altered glutamate function in psychosis. Future studies could explore the effects of DAAO and G72 in individuals with prodromal symptoms of psychosis, in order to elucidate glutamate dysfunction in this critical phase of the disorder.