OBJECTIVES To examine the controversial practice of off-label prescribing of atypical antipsychotic drugs and to review research evidence pertaining to the economics of their use, safety, efficacy and appropriateness of such prescribing. METHODS A comprehensive review of scientific literature published between 2001- 2009, covering all empirical studies that examined off-label prescribing of atypical antipsychotics. Quantitative and qualitative analyses of published secondary data for off-label uses of three leading atypical anti-psychotics were conducted to gain insights into prevalence of off-label use, costs, and mortality associated with their use. RESULTS Twenty experimental and observational studies qualified for inclusion. Most study participants were institutionalized elderly, Caucasian men, with Alzheimer's disease. The newer atypicals accounted for more than $11 billion in annual sales and represented 90% of the antipsychotic market in 2005. There was a five-fold increase in the prescription of these drugs particularly in children in the last decade and a half. Risperidone was the most prescribed drug off-label. EPS, gait disturbances and weight gain were the most commonly cited adverse events. Elderly patients with dementia-related psychosis treated with atypical antipsychotics were found to be at an increased risk of adverse events and death. CONCLUSIONS The research evidence available to determine the true extent and consequences of off-label prescribing of atypical antipsychotics, while scarce and conflicting, is mostly critical of their use in children and elderly with dementia. Scientific support documenting the efficacy and appropriateness of these drugs for treating depression and behavioral disorders of dementia is currently inconclusive. The high cost of these drugs may arguably offset the advantages stemming from their perceived lower side-effect profile.