Two separate studies involving tens of thousands of patients each - far more than previous efforts - found 11 variations in specific parts of the genetic code that had a strong association with the two diseases, six of which had not been previously identified.
The results, published online overnight in Nature Genetics, the world's top genetics journal, are based on the work of experts from more than 20 nations including Australia.
University of NSW psychiatrist Philip Mitchell, who led the Australian arm of the bipolar study, says existing treatments for bipolar disorder had mostly been discovered by chance and the improved insight into the biological underpinnings of the diseases would give researchers new targets on which to focus experiments.
"There are six or seven different medications used at the moment for bipolar disorder, but they still have very marked limitations and most people continue to have frequent episodes of illness that stop them progressing in their careers or maintaining relationships, and some people still attempt suicide," Professor Mitchell said.
"Identifying the genes will eventually give new targets for drug development. Overall, it's a very important and exciting study."
The researchers used high-speed genetic number-crunching to identify patterns commonly found in patients with schizophrenia and bipolar disorder but not seen in healthy people.
Two genetic variations emerged as particularly significant: one that encoded for a part of a channel that allows calcium ions to pass through cell membranes, and a second that programmed a particular protein to be expressed on a cell's surface.
Professor Mitchell said these two variations were strongly linked to schizophrenia and bipolar, explaining previous observations that people diagnosed with one condition often had family members with the other.
Vaughan Carr, of the Australian Schizophrenia Research Bank said while the new research did not yield the answer, "an important small piece of the puzzle has been identified".