This study investigated the relationships between antipsychotic drug use patterns and direct costs for 3,321 Medi-Cal patients with schizophrenia. Ordinary least-squares regression models were used to estimate the impact on costs of receiving antipsychotic drug treatment, delays in treatment, changes in therapy, and continuous therapy. Average costs were $25,940 per year per patient. Having used an antipsychotic drug was correlated with lower psychiatric hospital costs ($2,846 less) but higher nursing home costs. Completing one year of uninterrupted drug therapy was correlated with higher nursing home costs. Delayed drug treatment and changes in therapy increased the cost by $9,418 and $9,719, respectively.