Transmission of reward signals is a function of dopamine, a neurotransmitter known to be involved in the mechanism of psychosis. Using functional magnetic resonance imaging (fMRI), we investigated how expectation and receipt of monetary rewards modulate brain activation in patients with bipolar mania and schizophrenia. We studied 12 acutely manic patients with a history of bipolar disorder, 12 patients with a current episode of schizoaffective disorder or schizophrenia and 12 healthy subjects. All patients were treated with dopamine antagonists at the time of the study. Subjects performed a delayed incentive paradigm with monetary reward in the scanner that allowed for investigating effects of expectation, receipt, and omission of rewards. Patients with schizophrenia and healthy control subjects showed the expected activation of dopaminergic brain areas, that is, ventral tegmentum activation upon expectation of monetary rewards and nucleus accumbens activation during receipt vs omission of rewards. In manic patients, however, we did not find a similar pattern of brain activation and the differential signal in the nucleus accumbens upon receipt vs omission of rewards was significantly lower compared to the healthy control subjects. Our findings provide evidence for abnormal function of the dopamine system during receipt or omission of expected rewards in bipolar disorder. These deficits in prediction error processing in acute mania may help to explain symptoms of disinhibition and abnormal goal pursuit regulation.