Risperidone, a new antipsychotic drug, was recently approved by the Food and Drug Administration (FDA) on the basis of its having comparable efficacy and less toxicity than haloperidol. In a preliminary study to evaluate the therapeutic efficiency of this drug, we conducted a survey of resperidone utilization, cost, and safety during its first year of availability at an academic psychiatric hospital. Data were obtained from a computerized, centralized medical record system, from an adverse drug reaction monitoring system, and from pharmacy purchasing records. In its first year of availability, risperidone became the second most widely used antipsychotic agent at our institution. Most of this use extended beyond the adult schizophrenia population, for whom pre-marketing safety and efficacy data are available. The direct institutional cost of risperidone treatment exceeded the entire budget for antipsychotic drugs during the year before its release. Results from the adverse drug reaction reporting system did not indicate a strong advantage of risperidone over more established antipsychotic agents with respect to extrapyramidal side effects. Furthermore, the mean dose of risperidone associated with extrapyramidal symptoms was 3.5 mg/day, considerably lower than that suggested by pre-marketing studies in a more select patient group. These results confirm that new pharmacological agents are generally used in much broader patient populations than those for which efficacy and safety have been established prior to FDA approval. This study also raises questions about the therapeutic efficiency of risperidone compared with other antipsychotic drugs. We conclude that systematic studies of outcome, safety, and cost of new pharmaceuticals in naturalistic settings are needed to provide the data necessary to establish local standards of cost-effective care.