BACKGROUND AND HYPOTHESIS: Individuals with schizophrenia or bipolar disorder have attenuated auditory mismatch negativity (MMN) responses, indicating impaired sensory information processing. Computational models of effective connectivity between brain areas underlying MMN responses show reduced connectivity between fronto-temporal areas in individuals with schizophrenia. Here we ask whether children at familial high risk (FHR) of developing a serious mental disorder show similar alterations. STUDY DESIGN: We recruited 67 children at FHR for schizophrenia, 47 children at FHR for bipolar disorder as well as 59 matched population-based controls from the Danish High Risk and Resilience study. The 11-12-year-old participants engaged in a classical auditory MMN paradigm with deviations in frequency, duration, or frequency and duration, while we recorded their EEG. We used dynamic causal modeling (DCM) to infer on the effective connectivity between brain areas underlying MMN. STUDY RESULTS: DCM yielded strong evidence for differences in effective connectivity among groups in connections from right inferior frontal gyrus (IFG) to right superior temporal gyrus (STG), along with differences in intrinsic connectivity within primary auditory cortex (A1). Critically, the 2 high-risk groups differed in intrinsic connectivity in left STG and IFG as well as effective connectivity from right A1 to right STG. Results persisted even when controlling for past or present psychiatric diagnoses. CONCLUSIONS: We provide novel evidence that connectivity underlying MMN responses in children at FHR for schizophrenia and bipolar disorder is altered at the age of 11-12, echoing findings that have been found in individuals with manifest schizophrenia.