The mechanism of action of a relatively new antipsychotic drug-Risperidone differs from conventional antipsychotics like Haloperidol. We compared low dosages of Risperidone with near equivalent dosages of Haloperidol in first episode drug naive Acute and Transient Psychotic disorder. A single blind randomised four-week study protocol was employed. Highly significant and comparable efficacy as assessed by Brief Psychiatric Rating Scale and Global Assessment of Functioning Scale was seen at the end of the Study protocol in both the groups. Risperidone had significantly, an early onset of action on some of the positive as well as negative symptoms with less incidence of Extrapyramidal Symptoms in comparison to Haloperidol. We conclude that Risperidone may represent a potential useful first line agent in the treatment of Acute and Transient Psychotic Disorder.