BACKGROUND THE COMPONENTS OF HIGH COST OF TREATING A CHRONIC PSYCHIATRIC ILLNESS ARE: long-term continuous treatment consisting of consultation and medication costs, traveling to the treatment centre and taking time off from work for both patient and caregiver. Apart from direct treatment costs, expenditure of time in care-giving results in indirect costs. All these costs are borne by families as the sufferer may be unable to work. OBJECTIVE To estimate the cost of treatment of chronically ill patients at home, in terms of the above parameters. METHODS The sample consisted of 117 subjects of either sex in the age range of 18 to 60 years, ill for at least one year, diagnosed as schizophrenia (n=95) or bipolar disorder (n=22, a comparison group) who agreed to participate in the study along with at least one caregiver. The tools used were the Diagnostic Interview of Genetic Studies and Economic Burden Questionnaire administered to both the subject and the caregiver. CONCLUSIONS The costs of treatment were found to be high but with wide variations in the range. Costs for bipolar disorder were somewhat higher than those for schizophrenia at least for the period of study. Demographic differences between subjects and caregivers were present.