The pharmacology, pharmacokinetics, clinical efficacy, adverse effects, dosage, and cost of the atypical antipsychotic drug clozapine are reviewed. Clozapine is a dibenzazepine compound chemically similar to loxapine but with a distinct pharmacologic profile. Unlike currently available medications, clozapine has a low potential for causing extrapyramidal symptoms and does not induce dopamine type 2 receptor hypersensitivity. It shows affinity in vitro not only for dopamine type 1 and 2 receptors but also for histamine type 1, alpha-adrenergic type 1 and 2, serotonin type 2, and muscarinic receptors. Clozapine given orally is nearly completely absorbed and readily metabolized. Urinary excretion is the major route of metabolite elimination. Clozapine has been used to treat schizophrenia, nonschizophrenic psychotic states, depression, neuroses, and behavioral disorders. Double-blind comparative studies have shown clozapine to be superior to haloperidol, chlorpromazine, and placebo in treating the symptoms of schizophrenia, as measured with validated psychiatric rating scales. Adverse effects include orthostatic hypotension, tachycardia, benign hyperthermia, hypertension, seizures, and sedation. Many of these effects are transient. Because of the risk of agranulocytosis, a comprehensive case-management system has been developed. In treating acute psychosis, the optimum dosage of clozapine is 300-450 mg/day given orally in divided doses. The high cost of clozapine may be offset by improved patient response and reduced hospital costs. Clozapine may be superior to other agents in the treatment of refractory schizophrenia and is associated with a negligible incidence of extrapyramidal symptoms.