OBJECTIVES: The study assessed the impact of using off-label mood stabilizers on total health expenditures, inpatient hospitalizations, long term care stays and emergency room (ER) visits for patients with schizophrenia. METHODS: Georgia Medicaid claims from 1999-2001 were analyzed for schizophrenic patients ≥ 16 years who initiated antipsychotic or mood stabilizer treatment between April 1999 and December 2000. A mood stabilizer was considered off-label if none of the ICD-9-CM codes could be matched with the labeled indications. The treatment group was formed of subjects who received an off-label mood stabilizer within 14 days after the treatment initiation, while the comparison group consisted of subjects who did not have any exposure to off-label mood stabilizers during the study period. Differences in annual outcomes were estimated between propensity score matched off-label and on-label users. RESULTS: A total of 830 pairs off-label and on-label users were successfully matched. During the one year observation period, both groups shared a similar antipsychotic utilization pattern and the off-label group filled an average 170.32 ± 117.69 days supply of mood stabilizers. The off-label group experienced significantly higher total health costs (net difference: $2060.52; P<0.0001) than the on-label group. The difference was mainly driven by the higher drug cost (net difference: $907.09; P<0.0001) and long term care cost (net difference: $572.50; P=0.0645) associated with the off-label users. Excess utilization of general and mental health related hospital, long term care and ER services were also observed in the off-label group; however, none of these differences was statistically significant. CONCLUSIONS: Use of off-label mood stabilizer may increase total health cost without reducing the utilization of hospital, long term care stays and ER services. Despite the widespread off-label use of mood stabilizer, the result of this study does not support the long term utilization of off-label mood stabilizers among schizophrenic patients.