Cognitive heterogeneity characterizes individuals with schizophrenia and bipolar disorder; however, little is known of cognitive heterogeneity within young children at familial high-risk of schizophrenia or bipolar disorder. This study aimed to investigate heterogeneity across social cognitive and language functions in children at familial high-risk of schizophrenia or bipolar disorder, i.e. severe mental illness (FHR-SMI). This may help designate subgroups in need of intervention initiatives. A data-driven, hierarchical cluster analysis was applied across a sample of 322 children at FHR-SMI (FHR-SZ, n = 200; FHR-BP, n = 120) on measures of Theory of Mind, facial emotion recognition, social cognitive processing speed, receptive and pragmatic language. We examined differences between subgroups as well as differences between subgroups and a control group. Exploratively, the subgroups were compared in terms of social responsiveness and global functioning. A Typical-High Functioning Subgroup with intact social cognitive and language functioning (34.5%), a Mildly Impaired Subgroup with selective impairments in explicit Theory of Mind and language functioning (58.7%), and a Significantly Impaired Subgroup with social cognitive and language functioning impairments (6.8%) were identified. The subgroups differed significantly from each other and overall compares to the controls. The Significantly and Mildly Impaired Subgroups presented with poorer social responsiveness and global functioning than the Typical-High Functioning Subgroup. In young children with FHR-SMI, three subgroups with relatively homogeneous social cognitive and language functioning profiles were observed. Only a small proportion of children at FHR-SMI displayed large social cognitive and language functioning impairments in middle childhood.