Familial resemblance arises when family members are more similar than unrelated pairs of individuals, and may be estimated in terms of correlations or covariances among family members. Multifactorial heritability (or generalized heritability) quantifies the strength of the familial resemblance and represents the percentage of variance that is due to all additive familial effects including additive genetic and those of the familial environment. However, the traditional concept of heritability, which may be more appropriately called the genetic heritability, represents only the percentage of phenotypic variance due to additive genetic effects. Resolving the various sources of familial resemblance entails other issues. For example, there may be major gene effects that are largely or entirely nonadditive, temporal or developmental trends, and gene-gene (epistasis) and gene-environment interactions. The design of a family study determines which of these sources are resolvable. For example, in nuclear families consisting of parents and offspring, the genetic and familial environmental effects are not resolvable because these relatives share both genes and environments. However, extended pedigree and twin and adoption designs allow separation of the heritable effects and, possibly, more complex etiologies, including interactions. Various factors affect the estimation and interpretability of heritabilities, for example, assumptions regarding linearity and additivity, assortative mating, and the underlying distribution of the data. Nonnormality of the data can lead to errors in hypothesis testing, although it yields reasonably unbiased estimates. Fortunately, these and other complications can be directly modeled in many of the sophisticated software packages available today in genetic epidemiology.