OBJECTIVES: This study was carried out to evaluate the cost-effectiveness of paliperidone ER compared to two major oral atypical antipsychotics, olanzapine and quetiapine, in treating schizophrenia patients who were experiencing acute exacerbations in Taiwan. METHODS: Two decision analytic models, an acute treatment model and a long-term treatment model, were built from the payer’s perspective to predict the six-week and one-year health outcomes and total medical expenditures in a cohort of 100 patients. Health outcome measures included the number of patients responding (³30% decrease in PANSS) to treatment during the initial six weeks, and the number of stable days during a one-year period. Total direct medical costs (including inpatient and outpatient services, medication, and emergency room visits) were estimated. The models included discontinuation rates, response rates, and relapse rates to predict effectiveness. Frequency and unit costs of regular follow-up, relapse, and adverse effect management were used to estimate resource utilization. Systematic literature review, National Health Insurance Research Database analysis, and psychiatrist questionnaire interviews were conducted to obtain estimates for the model parameters. These estimates were further validated by a psychiatric expert panel. One-way sensitivity analyses were performed.  RESULTS: At the end of the six-week period, paliperidone ER resulted in an additional 3.1 responding patients and the incremental cost-effectiveness ratio (ICER) is 10,700 New Taiwan dollars (NT$) compared to olanzapine (US$1=NT$32.5). After a one-year period, paliperidone ER showed a higher proportion of patients continuing initial treatment and more days on therapy resulting in additional stable days. The ICER compared to olanzapine is NT$405.8 per additional stable day. Quetiapine resulted in the highest cost and was the least effective among the three antipsychotics in both models and is therefore a dominated alternative. CONCLUSIONS: Paliperidone ER is a cost-effective alternative compared to olanzapine and quetiapine for the treatment of schizophrenia patients in Taiwan.