Objective: Weight gain is a commonly observed adverse effect of atypical antipsychotic medications, but associated changes in energy balance and body composition are not well defined. The authors report here the effect of olanzapine on body weight, body composition, resting energy expenditure, and substrate oxidation as well as leptin, insulin, glucose, and lipid levels in a group of outpatient volunteers with first-episode psychosis. Method: Nine adults (six men and three women) experiencing their first psychotic episode who had no previous history of antipsychotic drug therapy began a regimen of olanzapine and were studied within 7 weeks and approximately 12 weeks after olanzapine initiation. Results: After approximately 12 weeks of olanzapine therapy, the median increase in body weight was 4.7 kg, a significant increase of 7.3% from first observation. Body fat, measured by dual-energy x-ray absorptiometry, increased significantly, with a propensity for central fat deposition. Lean body mass and bone mineral content did not change. Resting energy expenditure, measured by indirect calorimetry, did not change. Respiratory quotient significantly increased 0.12 with olanzapine and was greatest in those who gained >5% of their initial weight. Fasting insulin, C-peptide, and triglyceride levels significantly increased, but there were no changes in glucose levels; total, high density lipoprotein, or low density lipoprotein cholesterol levels; or leptin levels. Conclusions: Olanzapine appears to have induced an increase in central body fat deposition, insulin, and triglyceride levels, suggesting the possible development of insulin resistance. The decrease in fat oxidation may be secondary or predispose patients to olanzapine-induced weight gain.