OBJECTIVES: To determine the cost-effectiveness (measured using an incremental cost-utility ratio) of treating schizophrenia patients with olanzapine versus risperidone, clozapine, quetiapine, amisulpride, oral typical and depot 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, 12, 18, 24, 32 and 36 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 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: 10,972 patients were enrolled at baseline, 65% were eligible for analyses at 36 months. Treatment with olanzapine is more effective and less costly than clozapine and quetiapine. Treatment with olanzapine is more effective but more costly compared to treatment with risperidone, amisulpride, and oral typical or depot typical antipsychotics. The incremental cost-utility ratios of olanzapine versus these four medications were £12,343, £1,586, £14,849 and £23,379 per additional QALYs gained respectively. The bootstrap replications for uncertainty showed that 100% of the replications fell below a £30,000 per QALY threshold in the comparison with quetiapine and oral typicals. It was 98%, 91%, 99% and 79% for the comparison with risperidone, clozapine, amisulpride and depot typicals respectively. CONCLUSION: 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, oral and depot typical antipsychotic medications.