Novel antipsychotics represent a significant advance in the treatment of schizophrenia after many years of few developments. The conventional antipsychotics are potent D2 antagonists, but fail to achieve a response in about 30% of cases. They are also associated with a high rate of extrapyramidal side effects. The greater and broader spectrum of efficacy combined with the reduced short- and long-term side effects of the new drugs such as quetiapine, risperidone, olanzapine and ziprasidone, contribute to a fresh optimism for the pharmacotherapy of schizophrenia. These novel agents are now driving further advances in schizophrenia research through a growing understanding of their pharmacological and clinical profiles. Clozapine, the first novel antipsychotic, has relatively low activity at D2 receptors, a high affinity for D4 receptors and a greater 5-HT2 (serotonin) than D2 antagonism. Hence, clozapine and other novel antipsychotics can be classified as such by this latter characteristic. However, some of these drugs have D2 occupancy greater than 60% (the clinical response threshold), while others have a lower D2 occupancy. The novel antipsychotics according have also been classified according to their activity on different neurotransmitter systems. While more effective, novel antipsychotics are not a panacea; they have limitations and side effects. In clinical practice, the American Psychiatric Association recommends either a conventional or novel antipsychotic for initial treatment of schizophrenia, whereas Canadian guidelines recommend novel agents. These agents should also be considered for treatment of refractory schizophrenia. Patients whose schizophrenia does not respond to one of these agents may respond to another. Future research should involve longer clinical trials, given the long periods needed to establish efficacy, and should address many remaining questions about the novel agents.