Answered by E. Fuller Torrey, M.D.:
The short answer to your question is: we really do not know. The long answer begins approximately a century ago, when most cases of both schizophrenia and bipolar disorder were simply grouped together as insanity. Then, in the 20th century, psychiatrists proposed that the two were separate diseases, which is what all textbooks teach.
Clinically, there certainly are differences between typical schizophrenia and typical bipolar disorder. The former is primarily a disorder of thinking, the latter of mood. Individuals with schizophrenia generally have a worse clinical course and are less likely to return to the level of function they enjoyed before they became sick. Furthermore, individuals with schizophrenia almost never respond to lithium treatment alone, whereas many individuals with bipolar disorder do.
This neat dichotomy becomes clouded, however, by the fact that many individuals with these disorders are not typical. There are, in fact, individuals with all admixtures of symptoms of schizophrenia and bipolar disorder; those in the middle of this clinical spectrum are called schizoaffective. Even more confusing is the fact that some individuals change clinically over time, e.g., at age 18 they have predominantly bipolar clinical features, but at age 29 they have many more symptoms of schizophrenia. Looking at antecedents of the two diseases also does not clarify things. Genetic studies have pointed to many genetic areas that seem to be involved in both diseases. Both diseases have an excess of complications of pregnancy and birth, an excess of winter and spring births, and an excess of developmental delays in childhood.
In summary, schizophrenia and bipolar disorder share many antecedents but differ in their clinical expression. Thus, they may possibly be two facets of the same underlying disease, with the clinical differences governed by the part of the brain affected. But, as I said previously, we really do not know.