OBJECTIVE: To determine the cost-effectiveness (measured using an incremental cost-utility ratio) of treating schizophrenia patients with olanzapine versus risperidone, quetiapine, amisulpride, or oral typical antipsychotics. METHODS: European SOHO is a 3-year, prospective, outpatient, observational study associated with antipsychotic treatment in 10 European countries. Health care resource use and quality of life data (EuroQol EQ-5D and UK population utility values) were collected at baseline, 3, 6 and 12 months. UK health care costs were applied to the resource use data for the 10 countries. Pair-wise incremental costs and utilities were estimated between olanzapine-treated patients and patients treated with each of the other oral antipsychotics. Utility increments were used to estimate quality-adjusted life-years (QALYs) gained. Incremental cost-utility ratios were expressed as the additional cost per QALY gained. Bootstrap replications provided an estimate of uncertainty. RESULTS: 10972 patients were enrolled at baseline, 80% were eligible for analyses at 12 months. Treatment with olanzapine is more effective and less costly than quetiapine and amisulpride. Treatment with olanzapine is more effective compared to treatment with risperidone. The incremental cost is marginal. The incremental cost-utility ratio was £5156 per additional QALY gained. The bootstrap replications for the above comparisons showed 100% of the replications falling below a £30,000 per QALY threshold. Treatment with olanzapine is more effective compared to treatment with oral typical antipsychotics. The additional cost is marginal. The incremental cost-utility ratio for olanzapine versus oral typical treatment was £15696 per additional QALY gained. The bootstrap replications showed 97% of the replications below a $30,000 per QALY threshold. CONCLUSIONS: Among SOHO patients, if a funding threshold of £30 000 per QALY gained is assumed, olanzapine has a high probability of being the most cost-effective treatment compared with atypical and oral typical antipsychotic medications.