The early recognition and management of a first episode of schizophrenic illness is a difficult task, with identification complicated by a broad differential diagnosis, lack of definitive data on the prognostic implications of premorbid/prodromal symptoms, and, until recently, treatment limited to pharmacologic agents with severe adverse effects. The first psychotic episode in patients with schizophrenia is the most responsive to treatment in terms of both rate and degree. However, first-episode patients are also more likely to develop motor side effects, even at lower medication doses, than multiepisode patients. Considerable evidence supports the assertion that early treatment can improve outcome and possibly prevent the development of full-blown illness in high-risk individuals. There is evidence that atypical antipsychotic medications are effective in the treatment of first-episode schizophrenia and are well tolerated. The improved tolerability associated with the newer antipsychotic medications, including a lower risk for motor side effects and possible lower risk for development of tardive dyskinesia, has swung the risk-benefit balance in favor of early and aggressive treatment. By intervening early and providing long-term maintenance treatment, the course of schizophrenic illness may be altered in the coming years with overall decreased deterioration and chronicity and overall improved functioning resulting in lower societal costs.