The polygenic nature of schizophrenia (SCZ) implicates many variants in disease development. Rare variants of high penetrance have been shown to contribute to the disease prevalence. Whole-exome sequencing of a large three-generation family with SCZ and bipolar disorder identified a single segregating novel, rare, non-synonymous variant in the gene CASKIN1. The variant D1204N is absent from all databases, and CASKIN1 has a gnomAD missense score Z = 1.79 and pLI = 1, indicating its strong intolerance to variation. We find that introducing variants in the proline-rich region where the D1204N resides results in significant cellular changes in iPSC-derived neurons, consistent with CASKIN1’s known functions. We observe significant transcriptomic changes in 368 genes (padj < 0.05) involved in neuronal differentiation and nervous system development. We also observed nominally significant changes in the frequency of action potentials during differentiation, where the speed at which the edited and unedited cells reach the same level of activity differs. Our results suggest that CASKIN1 is an excellent gene candidate for psychosis development with high penetrance in this family.