Objective: To compare expected outcomes and costs of care in patients with chronic schizophrenia or schizoaffective disorders who are treated with risperidone versus olanzapine. Methods: A Markov model was developed to examine outcomes and costs of care in patients with chronic schizophrenia or schizoaffective disorders receiving risperidone or olanzapine. The time frame of interest was 1 year. The model focused particular attention on the likelihood of therapy switching and discontinuation as a result of treatment-emergent side effects, as the efficacy of these two agents is similar. Measures of interest included the incidence of relapse and selected side effects including extrapyramidal symptoms (EPS), prolactin-related disorders and diabetes, expected change in body weight, and the percentage of patients remaining on initial therapy at the end of 1 year. Costs of antipsychotic therapy and psychiatric and nonpsychiatric services also were examined. Results: At 1 year, the rate of EPS was estimated to be slightly higher for risperidone, as was the incidence of symptomatic prolactin-related disorders. The expected incidence of diabetes mellitus, while low, was slightly higher for olanzapine. Approximately 25% and 4% of olanzapine and risperidone patients, respectively, were projected to experience an increase in body weight greater than or equal to 7%. The estimated percentage of patients remaining on initial therapy at the end of 1 year was higher for risperidone than olanzapine (76.9% vs. 45.6%, respectively). Expected mean total costs of care per month of therapy were $2163 for risperidone and $2316 for olanzapine. Results from sensitivity analyses suggest that the probability of therapy discontinuation following weight gain > 5 kg would have to be lower than 0.1 for the number of patients remaining on therapy at the end of 1 year to be the same for risperidone and olanzapine. Conclusions: Compared with risperidone, treatment with olanzapine may result in greater increases in body weight, higher rates of therapy discontinuation, and higher costs of medical-care services.