BackgroundThere is concern that delaying treatment for psychosis may have a negative impact on its long-term course. A number of countries have developed early intervention teams but there is limited evidence regarding their cost-effectiveness.AimsTo compare the costs and cost-effectiveness of an early intervention service in London with standard care.MethodIndividuals in their first episode of psychosis (or those who had previously discontinued treatment) were recruited to the study. Clinical variables and costs were measured at baseline and then at 6- and 18-month follow-up. Information on quality of life and vocational outcomes were combined with costs to assess cost-effectiveness.ResultsA total of 144 people were randomised. Total mean costs were £11 685 in the early intervention group and £14 062 in the standard care group, with the difference not being significant (95% CI –£8128 to £3326). When costs were combined with improved vocational and quality of life outcomes it was shown that early intervention would have a very high likelihood of being cost-effective.ConclusionsEarly intervention did not increase costs and was highly likely to be cost-effective when compared with standard care.