Thus far, a handful of highly penetrant mutations conferring risk of psychosis have been discovered. Here we used whole-genome sequencing and long-range phasing to investigate an Icelandic kindred containing ten individuals with psychosis (schizophrenia, schizoaffective disorder or psychotic bipolar disorder). We found that all affected individuals carry RBM12 (RNA-binding-motif protein 12) c.2377G>T (P = 2.2 × 10-4), a nonsense mutation that results in the production of a truncated protein lacking a predicted RNA-recognition motif. We replicated the association in a Finnish family in which a second RBM12 truncating mutation (c.2532delT) segregates with psychosis (P = 0.020). c.2377G>T is not fully penetrant for psychosis; however, we found that carriers unaffected by psychosis resemble patients with schizophrenia in their non-psychotic psychiatric disorder and neuropsychological test profile (P = 0.0043) as well as in their life outcomes (including an increased chance of receiving disability benefits, P = 0.011). As RBM12 has not previously been linked to psychosis, this work provides new insight into psychiatric disease.