Disorders that share genetic risk factors often are placed in closely related diagnostic categories and treated similarly. Until recently, evidence for shared genetic etiology derived from classical research strategies – coaggregation in family and twin studies. Accumulating sufficient numbers of families was often problematic. However, in the era of genome-wide genotyping, we can now directly estimate the degree of sharing of genetic risk factors between disorders. This strategy is practical even for very rare disorders, where it is infeasible to ascertain informative families. Importantly, the estimates of genetic correlations from genome-wide genotypes are derived using such distant relatives that contamination by shared environmental factors seems unlikely. However, any method that seeks to quantify the shared etiology of disorders assumes they can be distinguished diagnostically from one another without error. Here we investigate the impact of misdiagnosis on estimates of genetic correlation both from traditional family data and from genome-wide genotypes of case–control samples from unrelated individuals. Our analyses show similar results for levels of misdiagnosis in both types of data. In both scenarios, genetic variances and heritabilities tend to be slightly underestimated but genetic correlations are overestimated, sometimes substantially so. For example, two genetically distinct but equally heritable disorders each with prevalence 1%, can generate false-positive estimates of genetic correlations of >0.2 in the presence of 10% reciprocal misdiagnosis. Strategies for minimizing the effects of misdiagnosis in cross-disorder genetic studies are discussed.