Background. Individuals with borderline personality disorder (BPD) frequently display co-morbid mental disorders. These disorders include 'internalizing' disorders (such as major depressive disorder and anxiety disorders) and 'externalizing' disorders (such as substance use disorders and antisocial personality disorder). It is hypothesized that these disorders may arise from latent 'internalizing' and 'externalizing' liability factors. Factor analytic studies suggest that internalizing and externalizing factors both contribute to BPD, but the extent to which such contributions are familial is unknown. Method. Participants were 368 probands (132 with BPD; 134 without BPD; and 102 with major depressive disorder) and 885 siblings and parents of probands. Participants were administered the Diagnostic Interview for DSM-IV Personality Disorders, the Revised Diagnostic Interview for Borderlines, and the Structured Clinical Interview for DSM-IV. Results. On confirmatory factor analysis of within-person associations of disorders, BPD loaded moderately on internalizing (factor loading 0.53, S.E.=0.10, p<0.001) and externalizing latent variables (0.48, S.E.=0.10, p<0.001). Within-family associations were assessed using structural equation models of familial and non-familial factors for BPD, internalizing disorders, and externalizing disorders. In a Cholesky decomposition model, 84% (S.E.=17%, p<0.001) of the association of BPD with internalizing and externalizing factors was accounted for by familial contributions. Conclusions. Familial internalizing and externalizing liability factors are both associated with, and therefore may mutually contribute to, BPD. These familial contributions account largely for the pattern of co-morbidity between BPD and internalizing and externalizing disorders.