Four years before the rediscovery of Mendel’s work in 1900, Karl Grassmann published a detailed, scholarly review of the heredity of psychosis which we here review. A full translation is in the appendix. We emphasize seven major conclusions from this review. First, while recognizing the key importance of heredity in the etiology of psychosis. Grassmann was critical of many of the highly speculative extant theories. Second, he reviewed most of the major methodologic concerns in the literature from what kinds of heredity to investigate to the problems with the global use of insanity as a diagnostic category. Third, he discussed in detail genetic theories associated with Degeneration theory, maintaining considerable skepticism. Fourth, he recognized nongenetic contribution to familial transmission. Fifth, he reviewed evidence for both homogeneous and heterogeneous transmission of forms of mental illness in families, suggesting that both were important. Sixth, while he noted that mania, melancholia, and cyclothymia commonly replaced each other in families, Verrücktheit (delusional psychoses) rarely co-segregated in families with these mood disorders. Seventh, Grassmann, like other 19th century writers, saw relatives to be of value only in assessing the level of hereditary predisposition in patients and had limited appreciation of the need for controlled studies.