Gender identity disorder (GID), recently renamed gender dysphoria (GD), is a rare condition characterized by an incongruity between gender identity and biological sex. Clinical evidence suggests that schizophrenia occurs in patients with GID at rates higher than in the general population and that patients with GID may have schizophrenia-like personality traits. Conversely, patients with schizophrenia may experience alterations in gender identity and gender role perception. Neurobiological research, including brain imaging and studies of finger length ratio and handedness, suggests that both these disorders are associated with altered cerebral sexual dimorphism and changes in cerebral lateralization. Various mechanisms, such as Toxoplasma infection, reduced levels of brain-derived neurotrophic factor (BDNF), early childhood adversity, and links with autism spectrum disorders, may account for some of this overlap. The implications of this association for further research are discussed.