Objective Establishing structural imaging correlates of psychosis symptoms in Alzheimer's disease (AD) could localise pathology and target symptomatic treatment. This study investigated whether psychosis symptoms are associated with visuoperceptual or frontal networks, and whether regional brain volume differences could be linked with the paranoid (persecutory delusions) or misidentification (misidentification phenomena and/or hallucinations) subtypes. Methods A total of 104 patients with probable AD (AddNeuroMed; 47 psychotic, 57 non‐psychotic), followed up for at least one year with structural MRI at baseline. Presence and subtype of psychosis symptoms were established using the Neuropsychiatric Inventory. Volume and cortical thickness measures in visuoperceptual and frontal networks were explored using multivariate analyses to compare with both a global (psychotic versus not) and subtype‐specific approach, adjusting for potential confounding factors. Results There was a significant main effect of psychosis subtypes on the ventral visual stream region of interest (F30,264 = 1.65, p = 0.021, np2 = 0.16). This was explained by reduced left parahippocampal gyrus volume (F1,97 = 11.1, p = 0.001, np2 = 0.10). When comparisons were made across psychosis subtypes, left parahippocampal volume reduction remained significant (F7,95 = 3.94, p = 0.011, np2 = 0.11) and was greatest for the misidentification and mixed subtypes compared to paranoid and non‐psychotic groups. Conclusions These findings implicate the ventral visual stream in psychosis in AD, consistent with integrative theories regarding origins of psychosis, and provide further evidence for a role in the misidentification subtype. Specifically, reduced volume in the parahippocampal gyrus is implicated in misidentification delusion formation, which we hypothesise is due to its role in context attribution. Copyright © 2017 John Wiley & Sons, Ltd.