OBJECTIVES: To estimate the schizophrenia-related direct medical costs using the attributable and incremental cost approaches. METHODS: Patients with a diagnosis for schizophrenic disorder (ICD-9-CM code 295) and other non-organic psychoses (ICD-9-CM code 298) were identified from the 2005-2008 Medical Expenditure Panel Survey (MEPS), a nationally representative annual dataset of non-institutionalized US residents. Schizophrenia-related direct medical costs were estimated for inpatient hospitalizations, prescription medications, and outpatient, office-based physician, emergency department, and home healthcare visits, and overall. For the attributable cost approach, schizophrenia-related costs were identified from each of the MEPS event files. For the incremental cost approach, the differences between the costs for patients with and without schizophrenia for each service type were calculated to yield the schizophrenia-associated incremental costs. RESULTS: We identified 348 patients with schizophrenia (weighted frequency=3.03 million). The mean schizophrenia-related direct medical cost per patient-year using the attributable cost approach was $5,538 (SE=$570). With the incremental cost approach, the mean cost per patient-year was $12,369 (SE=$1,205) for schizophrenia patients and $3,198 (SE=$47) for non-schizophrenia patients. Thus, the incremental cost associated with schizophrenia was $9171 (SE=1207) per patient-year. When demographic and clinical factors such as age, sex, race, marital status, insurance status, socioeconomic status, region of residence, perceived health status, mental health status, number of medical comorbidities, and number of mental health-related comorbidities were controlled for using ordinary least squares regression, the mean schizophrenia-related incremental direct medical cost per patient-year was $5115 (SE=$1240). CONCLUSIONS:  This study highlights the high financial burden of schizophrenia. Although the mean cost per patient-year estimated using the incremental cost approach was higher than that obtained using the attributable cost approach, the estimates were similar when patient demographic and clinical characteristics were controlled for in the incremental cost approach.