BACKGROUND/OBJECTIVES: Risperidone is a commonly used antipsychotic for the treatment of schizophrenia. Its major metabolic pathway is through the liver enzyme CYP2D6. Variants of CYP2D6 confer differing activity levels. Poor metabolizer phenotype is suspected to increase the risk of adverse drug reactions that could lead to risperidone discontinuation and poor patient outcomes. The objective of this study was to assess the potential costs and outcomes of a pharmacogenetic-guided risperidone treatment strategy for use in schizophrenics. METHODS: A decision analytic model was developed to estimate the incremental cost per QALY gained (ICER) and cost per relapse and hospitalization avoided, associated with a pharmacogenetic-guided strategy compared to a standard treatment approach for a hypothetical schizophrenic patient initiated on risperidone. We used a one-year time horizon and a payer perspective. Model probabilities, costs, and utilities were obtained from the literature. One-way sensitivity analyses were performed to explore the possible range of results. RESULTS: For one patient entering the model, pharmacogenetic-guided treatment increased QALYs  (0.00047), and prevented relapses (0.00782) as well as relapse-associated hospitalizations (0.00235) at an increased total cost ($167). This resulted in an ICER of $356,356, and costs of $21,468 per relapse avoided and $71,561 per hospitalization avoided relative to standard treatment. Findings were robust to one-way sensitivity analyses and did not change the base case conclusions.  CONCLUSIONS: Our results suggest a pharmacogenetic-guided treatment approach for risperidone may confer a small reduction in relapses and consequent hospitalizations, and a very minimal increase in QALYs for relatively low additional cost compared to standard treatment. However, the large ICER suggests this approach is not cost effective.