This study investigates the effectiveness and cost of typical versus atypical antipsychotics in a nationwide German cohort of patients with schizophrenia. The study sample consisted of patients insured with 4 sickness funds (n = 8,610) who were followed up for 12 months after hospital discharge with a diagnosis of schizophrenia in 2003. Multivariate regression models were fitted to assess the relationship between outcome variables (rehospitalization, bed-days, prescriptions against adverse effects, cost) and medication type, sex, age, and severity. Severity was assessed by prior bed-days due to schizophrenia during 2000 to 2002. Risk of rehospitalization did not differ between groups but within each group severity (P = 0.0003). Males (P = 0.0016) and patients younger than 35 years (P < 0.0001) had a higher risk of rehospitalization. Number of bed-days was lower for treatment with typicals compared with atypicals (P < 0.0001); furthermore, bed-days depended on severity of disease (P < 0.0001). Prescriptions of drugs against extrapyramidal symptoms, anxiety, and agitation were higher for patients treated with typicals (P < 0.0001 for each). Mean predicted treatment cost per year was € 6442 for atypicals versus € 4443 for typicals (P < 0.0001). This study does not support unconditional superiority of atypicals over typicals, neither in terms of effectiveness nor in terms of cost.