Background: Psychosis is a defining feature of schizophrenia consisting of formal thought disorder; delusions, and hallucinations. Although psychosis is present in the majority of patients with schizophrenia, the prevalence, responsiveness to atypical antipsychotic drug therapy, and prediction of outcome of individual psychotic symptoms in a population of well-diagnosed patients with schizophrenia have not been conclusively established. Methods: This paper examined the prevalence, responsiveness to the atypical antipsychotic olanzapine, and relationship to outcome of individual psychotic symptoms using data from a previously reported large multicenter, double-blind clinical trial of olanzapine (mean daily dose at endpoint = 13.6 +/- 6.9 mg/day). Results: The most frequently reported psychotic symptoms at baseline were delusions (65%), conceptual disorganization (50%), and hallucinations (52%), and the majority of patients (68%) experienced from one to three symptoms. Additionally with olanzapine treatment there were significant improvements (p < .001) in baseline to endpoint Positive and Negative Symptom Scale (PANSS) psychotic item scores, with the largess effect sizes observed for hallucinatory behavior, unusual thought content, suspiciousness/persecution, and delusions. During the acute phase of the trial, quality of life was correlated significantly with baseline conceptual disorganization (p = .038) and unusual thought content (p = .023), and time spent in the hospital was correlated with unusual thought content (p = .005). Conclusions: The implications of these for the clinical management of schizophrenia are discussed. Biol Psychiatry 1999;46:361-364 (C) 1999 Society of Biological Psychiatry.