Olanzapine is a serotonin-dopamine receptor antagonist primarily used in the treatment of psychotic illnesses. It has been shown in numerous large trials to be as equally effective as haloperidol in the acute treatment and maintenance treatment of schizophrenia. However, olanzapine was shown to be more effective than haloperidol in the treatment of negative symptoms and to cause significantly fewer extrapyramidal symptoms. Furthermore, early reports suggest that olanzapine produces less tardive dyskinesia than haloperidol, though longer follow-up data are needed. Current studies have failed to demonstrate the efficacy of olanzapine in the treatment of refractory schizophrenia. One comparison trial of olanzapine versus risperidone has indicated similar efficacy. Clinical trials in acute mania have found olanzapine to be more effective than placebo. However, there is no role for olanzapine monotherapy in bipolar disorder given current studies. Although olanzapine has shown a low rate of extrapyramidal symptoms, it is not without adverse effects. Clinically significant weight gain has been noted with olanzapine in each of the large clinical trials. The degree of weight gain is similar to clozapine and probably greater than that observed with risperidone. The long-term medical consequence of atypical antipsychotic-induced weight gain is not known at this time. While generally considered first-line drugs from an efficacy and adverse effect standpoint, pharmacoeconomic studies are needed to justify the large acquisition cost of olanzapine compared to typical agents.