The objective of this study is to identify factors that predict the costs of community mental health services. A random sample of individuals, selected from all identified cases of psychosis in two geographically defined catchment areas, were interviewed before the establishment of community mental health teams and then after these teams had been operating for approximately 2.5 years. One of the sectors developed an intensive community service, with a more standard service in the other sector. Significant predictors of higher costs were older age and higher levels of disability. Predictors of lower costs were longer duration of illness and more years of education. A reduced model revealed that being male and having more symptoms were also predictors of higher costs. After controlling for background characteristics, it was revealed that services provided to clients from the intensive sector were $1,894 more expensive over 6 months than those provided to standard sector clients.