Background Verbal and visual memory deficits are prominent trait markers for schizophrenia, with impairments also observed in first-degree relatives [Snitz, B.E., Macdonald, A.W., 3rd, & Carter, C.S. (2006). Cognitive deficits in unaffected first-degree relatives of schizophrenia patients: a meta-analytic review of putative endophenotypes. Schizophr Bull, 32(1), 179–194]. It remains unclear whether deficits lie in encoding or savings, and whether the deficit is heritable. Objective To determine which features of memory performance are impaired in both patients and their healthy siblings, possibly reflecting shared genetic effects. Method We tested episodic memory using Logical Memory (LM) and Visual Reproduction (VR) tasks of the Wechsler Memory Scale (Revised). Participants included patients with schizophrenia (n =162), their nonpsychotic siblings (n =146), and controls (n =205), recruited for the “CBDB/NIMH Sibling Study”. We assessed immediate encoding and 30 minute and 24 hour delayed recall as well as savings scores for the “short delay” (immediate to 30 min) and “long delay” (30 min to 24 h) intervals. Results We observed marked verbal recall deficits in both patients and siblings compared to controls for all stages (p <.0001). Only patients experienced significant verbal and visual savings deficits over short delays (p <.0001) as well as verbal deficits over long delays (p <.005). In siblings, no saving score difficulty was apparent for either measure. Conclusions Our results confirm shared impairment in verbal learning, but not memory, for both patients and siblings, therefore marking it as a potential schizophrenia-associated intermediate phenotype. The results implicate neural systems involved in immediate encoding and stabilization of memory representations in genetic risk for schizophrenia. In contrast, visual recall and savings impairments appear to be illness, i.e. state, deficits.