There have been few replicated examples of genotype x environment interaction effects on behavioral variation or risk of psychiatric disorder. We review some of the factors that have made detection of genotype x environment interaction effects difficult, and show how genotype x shared environment interaction (GxSE) effects are commonly confounded with genetic parameters in data from twin pairs reared together. Historic data on twin pairs reared apart can in principle be used to estimate such GxSE effects, but have rarely been used for this purpose. We illustrate this using previously published data from the Swedish Adoption Twin Study of Aging (SATSA), which suggest that GxSE effects could account for as much as 25% of the total variance in risk of becoming a regular smoker. Since few separated twin pairs will be available for study in the future, we also consider methods for modifying variance components linkage analysis to allow for environmental interactions with linked loci.