Medial temporal lobe (MTL) structures play a central role in episodic memory. Prior studies suggest that individuals with schizophrenia have deficits in episodic memory as well as structural abnormalities of the medial temporal lobe (MTL). While correlations have been reported between MTL volume loss and episodic memory deficits in such individuals, it is not clear whether such correlations reflect the influence of the disease state or of underlying genetic influences that might contribute to risk. We used high resolution magnetic resonance imaging and probabilistic algorithms for image analysis to determine whether MTL structure, episodic memory performance and the relationship between the two differed among groups of 47 healthy control subjects, 50 control siblings, 39 schizophrenia subjects, and 33 siblings of schizophrenia subjects. High-dimensional large deformation brain mapping was used to obtain volume measures of the hippocampus. Cortical distance mapping was used to obtain volume and thickness measures of the parahippocampal gyrus (PHG) and its substructures: the entorhinal cortex (ERC), the perirhinal cortex (PRC), and the parahippocampal cortex (PHC). Neuropsychological data was used to establish an episodic memory domain score for each subject. Both schizophrenia subjects and their siblings displayed abnormalities in episodic memory performance. Siblings of individuals with schizophrenia, and to a lesser extent, individuals with schizophrenia themselves, displayed abnormalities in measures of MTL structure (volume loss or cortical thinning) as compared to control groups. Further, we observed correlations between structural measures and memory performance in both schizophrenia subjects and their siblings, but not in their respective control groups. These findings suggest that disease-specific genetic factors present in both patients and their relatives may be responsible for correlated abnormalities of MTL structure and memory impairment. The observed attenuated effect of such factors on MTL structure in individuals with schizophrenia may be due to non-genetic influences related to the development and progression of the disease on global brain structure and cognitive processing.