OBJECTIVES: Risperidone long acting injection (risperidone LAI) is the first long acting atypical injection and leads to improved medication adherence that is associated with lower recurrence of symptoms than current management. The purpose of this study was to compare the cost-effectiveness of risperidone LAI with oral risperidone, oral olanzapine and typical depot injections in patients with schizophrenia that are partially adherent to their medication. The analysis is based on the cost and outcomes incurred in the specialized public psychiatry setting. The perspective of the analysis was the Australian health care system. METHODS: A 1-year decision analytic model was developed using probabilistic sensitivity analysis to explore uncertainty. The outcomes used in the cost-effectiveness analysis (CEA) were relapses avoided, life years gained, deaths due to suicides averted and quality adjusted life years (QALY) gained. Local resource utilization focused on both cost of hospitalization and other community-care costs such as pharmaceuticals and outpatient consultations. Clinical trial data and other epidemiological assumptions based on the published literature were used to elicit the event probabilities in the decision analytic model. Utilities for each of the possible health states in the model were based on symptom severity and drug related adverse events. These data were derived from the Australian general population using the Assessment Quality of Life (AQOL) utility instrument. RESULTS: Against the weighted comparator risperidone LAI was dominant. That is, the increased cost of risperidone LAI was more than offset by the reduction in hospitalizations and other costs associated with symptom recurrence. Analysis versus oral risperidone and oral olanzapine also showed that risperidone LAI was dominant. The incremental cost-effectiveness ratio (ICER) against typical depots produced a less favorable result due to the low acquisition cost of these agents. Probabilistic sensitivity analyses showed a 100% likelihood of an ICER of less than $50,000 per QALY. CONCLUSIONS: Risperidone LAI represents a cost-effective intervention against current management for patients who are partially adherent to their medication. The introduction of this product in Australian clinical practice will result in significant clinical and economic benefits to the community because partial adherence to medication is a major reason for relapse of symptoms in patients with schizophrenia.