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OBJECTIVE: The purpose of this study was to compare the rehospitalization rates of patients discharged from the hospital while being treated with risperidone, olanzapine, or conventional antipsychotics. METHOD: By using Israel’s National Psychiatric Hospitalization Case Registry, rehospitalization status was monitored for all patients with schizophrenia who were discharged from any inpatient psychiatric facility in Israel while taking risperidone (N=268) or olanzapine (N=313) between Jan. 1, 1998, and Dec. 31, 1998, and a group of patients discharged during that time who were treated with conventional antipsychotics (N=458). Time to readmission over the course of 2 years was measured by the product-limit (Kaplan-Meier) formula. RESULTS: The readmission rate for patients discharged while taking conventional antipsychotics was higher than the rates for patients treated with either risperidone or olanzapine. At 24 months, 67% of the risperidone-treated patients and 69% of the olanzapine-treated patients remained in the community, as compared to 52% of the patients treated with conventional antipsychotics. CONCLUSIONS: This study suggests that the rehospitalization rates of patients taking the novel antipsychotics risperidone and olanzapine are not different from each other and are considerably lower than the rate for patients treated with conventional antipsychotics. The results confirm findings of previous studies suggesting that the levels of overall effectiveness of risperidone and olanzapine are not very different and offers evidence that these drugs are more effective in preventing rehospitalization than conventional antipsychotic drugs.