OBJECTIVE: To compare rehospitalization rates of individuals with schizophrenia who had been treated and discharged on olanzapine or quetiapine from acute care hospitals. METHODS: Using Premier's PerspectiveTM database - the largest U.S. hospital drug utilization database, rehospitalization status was examined for inpatients with schizophrenia (ICD9-CM: 295.xx) that were successfully treated and discharged on olanzapine (N = 7573) or quetiapine (N = 3368) between January 1999 and September 2001. A successfully treated patient was one who started treatment with olanzapine or quetiapine in hospital and discharged on the same antipsychotic. Time to readmission up to 33 months was analyzed by Kaplan-Meier models. Cox proportional hazard models were used to derive the hazard ratio (HR) for rehospitalization by adjusting potential confounding factors. RESULTS: Overall rehospitalization rate in the study population was 35.3%. After adjusting for potential confounding factors, quetiapine therapy (average daily dose = 356.1mg) was associated with 25% increased risk of rehospitalization compared to olanzapine (average daily dose = 17.3mg) (HR = 1.25, 95% confidence interval 1.17-1.34, p <0.0001). Additionally, younger age, schizoaffective/paranoid diagnoses, higher severity level, and urban hospital location were significantly associated with higher risk of readmission. CONCLUSIONS: This study suggests that olanzapine-treated patients had lower risk of rehospitalization than quetiapine-treated patients. Moreover, certain patient demographic/clinical factors and institution characteristics also influenced hospital readmission.