OBJECTIVES Since the end of the 20th century, the Brazilian Health Ministry has been working on an effective mental health policy in order to keep patients out of the hospital setting as much as possible. In the last 10 years, two important programs for the treatment of schizophrenia patients were established: In 2002 Psychosocial Attention Centers (CAPxs) and in 2003 “Back to home” program, along with the adoption of new drugs. The purpose of this evaluation is to evaluate the impact of the Brazilian Public Mental Health Policy on schizophrenia hospitalization reduction. METHODS A retrospective analysis was performed using DATASUS (Government Healthcare database) from Jan 1998 until Dec 2007 to investigate the number of hospitalizations and days of hospitalization associated with schizophrenia and the cost associated to these hospital stays. Costs are reported in Brazilian reais RESULTS In ten years, the amount of hospitalizations due to schizophrenia reduced in 55% and the total costs associated to hospitalization reduced in 68%. The cost of one day hospitalization was R$ 21.12 in 1998 and R$31, 78 in 2007. The average length of stay increased 28% and the average total cost of hospitalization increased 93% CONCLUSIONS This analysis suggests that the mental health policy was effective in reducing schizophrenia hospitalization rates and total costs and that the patients that are hospitalized are probably those with more severe condition, requiring longer stay and more expensive health care resources.