OBJECTIVE Impairments in recognising negative emotions are found in individuals with first-episode and chronic schizophrenia and also in those at ultra-high risk for the illness. Whether these impairments are an endophenotype for schizophrenia is unclear. To examine the heritability of emotion recognition, the aim of this study was to examine whether facial and prosody emotion recognition deficits, particularly for negative emotions, are also present in unaffected first-degree relatives of people with schizophrenia. METHODS Face and prosody emotion recognition (ER) were examined in individuals with first-episode schizophrenia (n=30), their unaffected first-degree relatives (n=27) and healthy controls (n=30). Measures of psychopathology and IQ were also administered. RESULTS On the face ER task, first-episode schizophrenia participants performed significantly more poorly in recognising anger (p=.017), disgust (p=.033) and fear (p=.040) and first-degree relatives were significantly poorer at recognising fear (p=.003) than healthy controls. On the prosody ER task, first-episode schizophrenia participants made significantly more errors in recognising anger (p=.001) and surprise (p=.003) and first-degree relatives were significantly poorer at recognising anger (p=.005) than healthy controls. Effect sizes were medium to large. After controlling for age, IQ and symptoms, both unaffected first-degree relatives and first-episode schizophrenia patients displayed a significant deficit in facial fear recognition relative to healthy controls (p=.040 and p=.048, respectively). This deficit was not associated with current psychiatric symptoms. CONCLUSIONS These findings bolster evidence for emotion recognition (particularly for fear) as a heritable characteristic of schizophrenia. However, the diagnostic specificity of this finding requires further investigation.