Objectives: The effect of family environment on the development of bipolar disorder (BD) in children is not known. We sought to characterize families with children at high risk for developing BD in order to better understand the contributions of family environment to the development of childhood BD. Methods: We collected demographic data and parental ratings on the Family Environment Scale (FES) for 56 children (aged 6–18 years) from 36 families with at least one biological parent with BD. The cohort had previously been psychiatrically diagnosed according to semi-structured interviews. Results: Statistical comparisons with normative data indicated that parents’ ratings were significantly lower on the FES Cohesion and Organization scales and were significantly higher on the FES Conflict scale. Multivariate analyses of variance indicated that families with both parents having a mood disorder had no significantly different FES scores than families with only one parent with a mood disorder (BD). Diagnostic data indicated that while 54% of the children in the sample had an Axis I disorder and 14% had BD, FES scores did not differ significantly for subjects with or without an Axis I disorder, or with or without BD. Conclusions: Families with a bipolar parent differ from the average family in having less cohesion and organization, and more conflict. Despite this difference, it does not appear that the environment alone of families with a bipolar parent determines the outcome of psychopathology in the children, or that the psychopathology of the children determines the family environment.