Background: Schizophrenia is the most common psychotic disorder and responsible for approximately half of long-term psychiatric hospitalizations. Antipsychotic medications reduce the psychotic symptoms and prevent relapses. The choice of drug for treatment of schizophrenia depends on many issues, including effectiveness, cost, side-effect burden, availability, and tolerability. Many studies have compared antipsychotic drugs with one another, but no broad consensus has been reached. Our study compares the clinical effectiveness, safety and cost effectiveness of atypical antipsychotics in our setting.Methods: This was an observational, prospective study in which schizophrenia patients receiving either olanzapine, risperidone or aripiprazole were enrolled. Patients were followed up for 3 months. Evaluation of effectiveness was done by analysing mean reduction in PANSS score. Analysis of ADRs was done using WHO causality scale and Hartwig and Siegel severity scale. Cost analysis was done by comparing all three groups in term of cost range of antipsychotic drugs per improvement in PANSS score during the study period.Results: In the present study, the average dose of antipsychotic drugs received by a patient per day was 8.83±2.98 mg in olanzapine group, 4.76±1.12 mg in risperidone group and 20.43±8.5 mg in aripiprazole group. Mean reduction in PANSS score from baseline to 12 weeks was 23.79% in olanzapine group, 25.41% in risperidone group and 24.65% in aripiprazole group. Conclusions: All the groups were equally effective in reduction in PANSS score while risperidone was the most cost effective.