Working memory may be conceptualized as a multi-component system involving the active maintenance and manipulation of stored information in the service of planning/guiding behaviour. Impaired spatial working memory is a robust finding in schizophrenia patients which has been related to an impairment in frontostriatal connectivity. The purpose of this study was to examine the specificity of this impairment by comparing the mnemonic and executive aspects of working memory performance in schizophrenia and bipolar disorder with psychotic features, focusing particularly on the functional dynamics between task components. Twenty-four patients with schizophrenia, 14 patients with bipolar I disorder (manic phase) and 33 healthy control subjects were assessed using the Cambridge Neuropsychological Test Automated Battery (CANTAB): including the spatial working memory (between search errors and strategy scores) spatial span (storage capacity) and spatial planning (Stockings of Cambridge: accuracy and latency) tasks. Both patient groups were impaired on the spatial span task, which requires the maintenance and retrieval of stored information. In contrast, only schizophrenia patients showed a significant deficit in between search errors, which requires both maintenance and manipulation of information in working memory. That is, they exhibited both a mnemonic and an executive dysfunction. Spatial span was particularly important to accurate planning ability in bipolar patients. In contrast, in patients with schizophrenia poor spatial working memory was a significant predictor of planning impairments, consistent with failures in goal selection, evaluation and/or execution. Furthermore, initial planning time was positively correlated with the latency to complete a planning sequence. This pattern of slow cognitive processing in schizophrenia patients only, resembled that reported previously in patients with basal ganglia disorders. These findings are discussed in terms of a possible common disturbance in fronto-parietal circuitry in the two disorders together with a specific disturbance of fronto-striatal circuitry in schizophrenia, that is not present in bipolar disorder.