The high costs and efficacy of clozapine warrant a systematic pharmacoeconomic evaluation to assess its relative cost-utility compared with that of older antipsychotic therapies. An economic analysis of clozapine consisted of a meta-analysis and a cost-utility analysis. Clozapine was compared with haloperidol and chlorpromazine. An incidence-based deterministic decision analysis was used to model the management of chronic schizophrenia over one year. Probabilities of clinical outcomes were obtained from a random effects, single arm meta-analysis. Utility weights were evaluated in a cohort of patients by using a standard gamble methodology. A government payer perspective was adopted for this analysis. Clozapine was the dominant therapy in this analysis because it was associated with the lowest overall expected cost and highest expected number of quality-adjusted life years (QALYs). Compared with chlorpromazine, clozapine might save $38,879/year while producing 0.04 more QALYs. This analysis was limited in that studies were of short duration, the sample size for health utility analysis was small and the analysis was based on a model. Clozapine appears to be a very cost effective therapy in patients with treatment-resistant schizophrenia compared with haloperidol and chlorpromazine.