OBJECTIVE: To explore the direct and indirect costs in a cohort of 225 risperidone-treated patients with schizophrenia followed up annually during 5 years. METHOD: Data on costs for medication, hospitalization, sheltered living and productivity losses, as well as degree of social isolation, were collected. RESULTS: The direct costs were dominated by hospitalization and sheltered living expenses, while drug costs only represented 7% of the direct costs. Indirect costs represented 43% of the total costs during the 5 years. About 12% worked full-time, and 12% worked part-time, implying large productivity losses. As a consequence of the national mental health care reform, a substantial shift of costs from hospital care to sheltered living took place on the national level, but the reduction of hospital days for the study patients over time was much larger suggesting that the switch from first to second generation compounds was therapeutically successful. A high degree of social isolation was seen, with more than 20% being completely without social contacts and 30% seeing friends/relatives less often than once a week. CONCLUSION: The economic costs of schizophrenia are high and driven by the need for assisted living and hospitalizations, together with productivity losses. In addition, the intangible costs, such as social contacts, are also high.