Objective: Bipolar disorder (BD) has been associated with abnormal reward functioning including pleasure-seeking and impulsivity. Here we sought to clarify whether these changes can be attributed to abnormalities in the neural processing of reward valuation or error prediction. Moreover, we tested whether abnormalities in these processes are associated with familial vulnerability to BD. Methods: We obtained functional magnetic resonance imaging data from patients with recently diagnosed BD (n = 85), their unaffected first-degree relatives (n = 44), and healthy control participants (n = 66) while they were performing a monetary card game. We used a region-of-interest approach to test for group differences in the activation of the midbrain, the ventral striatum, and the prefrontal cortex during reward valuation and error prediction. Results: Patients with BD showed decreased prediction error signal in ventrolateral prefrontal cortex and the unaffected relatives showed decreased prediction error signal in the supplementary motor area in comparison to healthy controls. There were no significant group differences in the activation of the ventral striatum during the task. In healthy controls, prediction error signal in dorsal anterior cingulate cortex correlated with an out-of-scanner measure of motor inhibition but this association was absent in patients and relatives. Conclusions: The findings indicate that abnormal reward processing in BD is primarily related to deficits in the engagement of prefrontal regions involved in inhibitory control during error prediction. In contrast, deficient activation in supplementary motor cortex involved in planning of movement emerged as a familial vulnerability to BD.