Odorants represent powerful stimuli capable of eliciting various emotional responses. In schizophrenia patients and their non-affected relatives, olfactory and emotional functions are impaired, revealing a familial influence on these deficits. We aimed at determining the neural basis of emotional olfactory dysfunctions using odors of different emotional valence for mood induction and functional magnetic resonance imaging (fMRI) by comparing 13 schizophrenia patients, their non-affected brothers and 26 matched healthy controls. Blood-oxygen-level-dependent (BOLD) effects and subjective mood changes were assessed during negative (rotten yeast), positive (vanilla) and neutral (ambient air) olfactory stimulation. Group comparisons of brain activation were performed in regions of interest. Subjective ratings were comparable between groups and indicated successful mood induction. However, during stimulation with the negative odor, hypofunctional activity emerged in regions of the right frontal and temporal cortex in the patients. A familial influence in the neural substrates of negative olfactory dysfunction was indicated by a similar reduced frontal brain activity in relatives. Dysfunctions therefore appeared to be located in regions involved in higher cognitive processes associated with olfaction. No familial influences were indicated for cerebral dysfunctions during positive olfactory stimulation. Results point to a differentiation between trait and state components in cerebral dysfunctions during emotional olfactory processing in schizophrenia.