OBJECTIVES: To identify relapse in schizophrenia and the main cost drivers of relapse using a claims-based algorithm. METHODS:  Multistate Medicaid data (1997–2010) were used to identify adults with schizophrenia receiving atypical antipsychotics (AAPs). The first schizophrenia diagnosis following AAP initiation was defined as the index date. Baseline weekly cost was assessed during the 12 months before the index date, and weekly costs were calculated for ≥2 years post index. An algorithm was developed to identify relapse episodes based on weeks associated with high cost increase from baseline and high absolute weekly cost. Resource use and costs of relapsers during baseline and relapse episodes were compared using incidence rate ratios (IRRs) and bootstrap methods. No adjustment was made for multiplicity. RESULTS: 9,793 relapsers were identified, with a mean of 9 relapse episodes per patient. Duration of relapse episodes decreased over time, with a mean(median) duration of 34(4) weeks for the first and 8(1) weeks for remaining episodes. Compared with baseline, resource utilization during relapse episodes was significantly greater in pharmacy, outpatient, and institutional visits (hospitalizations and emergency room visits), with IRRs ranging from 1.9–2.4 (all p<.0001). Correspondingly, relapse was associated with a mean(95% CI) cost increase of $2459($2384–$2539)—nearly 6 times larger than mean(median) weekly baseline maintenance cost of $425($148). Institutional visits characterized most (53%) of the relapse episode incremental costs, with hospitalizations (excluding mental institute inpatient admissions) representing 36%. CONCLUSIONS: Relapses in schizophrenia patients were associated with cost on average 6 times higher than the median maintenance costs. Institutional visits characterized most of the cost increase.