Schizophrenia and bipolar disorder are major psychiatric disorders with high heritability and overlapping genetic variance. Here we perform a genome-wide association study in an ethnically homogeneous cohort of 904 schizophrenia cases and 1,640 controls drawn from the Ashkenazi Jewish population. We identify a novel genome-wide significant risk locus at chromosome 4q26, demonstrating the potential advantages of this founder population for gene discovery. The top single-nucleotide polymorphism (SNP; rs11098403) demonstrates consistent effects across 11 replication and extension cohorts, totalling 23, 191 samples across multiple ethnicities, regardless of diagnosis (schizophrenia or bipolar disorder), resulting in Pmeta=9.49 × 10(-12) (odds ratio (OR)=1.13, 95% confidence interval (CI): 1.08-1.17) across both disorders and Pmeta=2.67 × 10(-8) (OR=1.15, 95% CI: 1.08-1.21) for schizophrenia alone. In addition, this intergenic SNP significantly predicts postmortem cerebellar gene expression of NDST3, which encodes an enzyme critical to heparan sulphate metabolism. Heparan sulphate binding is critical to neurite outgrowth, axon formation and synaptic processes thought to be aberrant in these disorders.