The aim of this study was to critically review the literature in order to determine if Theory of Mind (ToM) impairment can be considered a trait-marker for schizophrenia spectrum disorders and bipolar disorder (BD). Method: After a thorough literature search, we reviewed the empirical studies investigating ToM impairments in remitted schizophrenia patients, first episode patients, subjects at high-risk (HR) for psychosis and first-degree relatives of schizophrenia patients. Studies investigating ToM impairment in other schizophrenia spectrum conditions, affective psychosis and BD were also reviewed. Results: ToM abnormalities exist at onset and continue throughout the course of schizophrenia, persist into remission, and while less severe, are apparent in HR populations. Mentalizing impairments are also observed in other forms of psychotic illness and BD. Conclusion: Mentalizing impairment in schizophrenia spectrum disorders and BD might reflect underlying general cognitive deficits and residual symptom expression, rather than representing a specific trait-marker.