OBJECTIVES: The costs of schizophrenia in Austria are high and new long acting injectable (LAI) antipsychotics might be able to reduce costs due to a reduction of hospital stays. We aim to estimate budget effects of the introduction of a new LAI (Paliperidone Palmitate) in Austria. METHODS: A budget impact analysis was conducted that took direct costs of illness into account (i.e. costs for inpatient and outpatient services and drug costs). We used official Austrian remuneration prices as input parameters. The robustness of the model was checked by means of deterministic sensitivity analyses with regard to switch rates to Paliperidone Palmitate and rehospitalisation rates.   RESULTS: According to our calculations, direct total costs of schizophrenia in Austria reach € 254.36 million a year. The drug costs are € 26.14 million and the costs for inpatient and outpatient services are € 228.22 million. Within the next five years, drug costs will slightly decrease to  € 25.77 million due to a bigger market share of generic Quetiapine which offsets the higher drug costs of Paliperidon palmitate. The use of Quetiapine is associated with a higher rate of rehospitalisation. Therefore, costs for inpatient and outpatient services will increase to € 228.65 million, which results in an overall effect of € 60,000 additional costs compared to the situation without paliperidone palmitate.  CONCLUSIONS: The introduction of a new treatment of schizophrenia in Austria is budget neutral.