BACKGROUND: Relapse is one of the most costly aspects of schizophrenia. AIMS: To compare costs, clinical outcomes and quality of life for patients who experienced relapse in schizophrenia with a control group who did not relapse. METHOD: Patients were randomly selected from current psychiatric case-loads drawn from urban and suburban areas of Leicester. Differences in costs and outcomes by relapse status in the previous 6 months were examined using parametric and non-parametric tests, and multivariate analysis was used to examine factors associated with relapse and costs. RESULTS: Costs for the patients who relapsed were over four times higher than those for the non-relapse group. There were few statistically significant differences in clinical and quality of life measures by relapse status. Multivariate analyses suggested some significant correlates of relapse and costs. CONCLUSIONS: The higher costs associated with relapse will be of interest to policy-makers who face difficult choices concerning new but more expensive treatments for patients with schizophrenia.